We Take A Look At Why Eicher Motors Limited's (NSE:EICHERMOT) CEO Compensation Is Well Earned

Key Insights

• Eicher Motors to hold its Annual General Meeting on 22nd of August
• Total pay for CEO Siddhartha Lal includes ₹155.1m salary
• The total compensation is similar to the average for the industry
• Eicher Motors' EPS grew by 37% over the past three years while total shareholder return over the past three years was 88%

It would be hard to discount the role that CEO Siddhartha Lal has played in delivering the impressive results at Eicher Motors Limited (NSE:EICHERMOT) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 22nd of August. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

See our latest analysis for Eicher Motors

How Does Total Compensation For Siddhartha Lal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Eicher Motors Limited has a market capitalization of ₹1.3t, and reported total annual CEO compensation of ₹313m for the year to March 2024. That's a notable increase of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹155m.

On comparing similar companies in the Indian Auto industry with market capitalizations above ₹672b, we found that the median total CEO compensation was ₹242m. From this we gather that Siddhartha Lal is paid around the median for CEOs in the industry. Furthermore, Siddhartha Lal directly owns ₹43b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹155m	₹137m	50%
Other	₹157m	₹138m	50%
Total Compensation	₹313m	₹275m	100%

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Eicher Motors sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Eicher Motors Limited's Growth Numbers

Over the past three years, Eicher Motors Limited has seen its earnings per share (EPS) grow by 37% per year. In the last year, its revenue is up 19%.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Eicher Motors Limited Been A Good Investment?

Most shareholders would probably be pleased with Eicher Motors Limited for providing a total return of 88% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

Whatever your view on compensation, you might want to check if insiders are buying or selling Eicher Motors shares (free trial).

Important note: Eicher Motors is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.