We Think The Compensation For Igarashi Motors India Limited's (NSE:IGARASHI) CEO Looks About Right

Key Insights

• Igarashi Motors India to hold its Annual General Meeting on 9th of August
• Total pay for CEO Rajagopalan Chandrasekaran includes ₹19.8m salary
• Total compensation is similar to the industry average
• Igarashi Motors India's EPS declined by 28% over the past three years while total shareholder return over the past three years was 19%

Despite positive share price growth of 19% for Igarashi Motors India Limited (NSE:IGARASHI) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 9th of August may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Igarashi Motors India

How Does Total Compensation For Rajagopalan Chandrasekaran Compare With Other Companies In The Industry?

At the time of writing, our data shows that Igarashi Motors India Limited has a market capitalization of ₹19b, and reported total annual CEO compensation of ₹23m for the year to March 2024. That's a notable increase of 38% on last year. Notably, the salary which is ₹19.8m, represents most of the total compensation being paid.

For comparison, other companies in the Indian Auto Components industry with market capitalizations ranging between ₹8.4b and ₹34b had a median total CEO compensation of ₹26m. So it looks like Igarashi Motors India compensates Rajagopalan Chandrasekaran in line with the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	₹20m	₹17m	85%
Other	₹3.4m	-	15%
Total Compensation	₹23m	₹17m	100%

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. According to our research, Igarashi Motors India has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Igarashi Motors India Limited's Growth Numbers

Over the last three years, Igarashi Motors India Limited has shrunk its earnings per share by 28% per year. Its revenue is up 10% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Igarashi Motors India Limited Been A Good Investment?

With a total shareholder return of 19% over three years, Igarashi Motors India Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Igarashi Motors India that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com