We Think Shareholders May Want To Consider A Review Of GRP Limited's (NSE:GRPLTD) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at GRP Limited (NSE:GRPLTD) recently. At the upcoming AGM on 12 August 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for GRP

Comparing GRP Limited's CEO Compensation With the industry

Our data indicates that GRP Limited has a market capitalization of ₹1.2b, and total annual CEO compensation was reported as ₹7.4m for the year to March 2021. That's a notable decrease of 34% on last year. We note that the salary portion, which stands at ₹6.58m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹7.9m. This suggests that GRP remunerates its CEO largely in line with the industry average. What's more, Rajendra Gandhi holds ₹68m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹6.6m	₹10m	89%
Other	₹780k	₹1.1m	11%
Total Compensation	₹7.4m	₹11m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. According to our research, GRP has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at GRP Limited's Growth Numbers

GRP Limited has reduced its earnings per share by 54% a year over the last three years. In the last year, its revenue is down 20%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has GRP Limited Been A Good Investment?

Since shareholders would have lost about 21% over three years, some GRP Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for GRP (2 can't be ignored!) that you should be aware of before investing here.

Switching gears from GRP, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. 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.
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