Here's Why Menon Bearings Limited's (NSE:MENONBE) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Menon Bearings will host its Annual General Meeting on 6th of September
• Salary of ₹4.90m is part of CEO Ramesh Dixit's total remuneration
• Total compensation is similar to the industry average
• Menon Bearings' EPS grew by 0.1% over the past three years while total shareholder return over the past three years was 83%

Under the guidance of CEO Ramesh Dixit, Menon Bearings Limited (NSE:MENONBE) has performed reasonably well recently. As shareholders go into the upcoming AGM on 6th of September, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Menon Bearings

How Does Total Compensation For Ramesh Dixit Compare With Other Companies In The Industry?

According to our data, Menon Bearings Limited has a market capitalization of ₹7.2b, and paid its CEO total annual compensation worth ₹5.3m over the year to March 2024. Notably, that's an increase of 23% over the year before. We note that the salary portion, which stands at ₹4.90m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Indian Auto Components industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹6.1m. From this we gather that Ramesh Dixit is paid around the median for CEOs in the industry.

Component	2024	2023	Proportion (2024)
Salary	₹4.9m	₹3.9m	92%
Other	₹427k	₹394k	8%
Total Compensation	₹5.3m	₹4.3m	100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. Menon Bearings is paying a higher share of its remuneration through a salary in comparison to the overall 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 Menon Bearings Limited's Growth Numbers

Menon Bearings Limited saw earnings per share stay pretty flat over the last three years. It achieved revenue growth of 1.5% over the last year.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Menon Bearings Limited Been A Good Investment?

Most shareholders would probably be pleased with Menon Bearings Limited for providing a total return of 83% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Menon Bearings that investors should be aware of in a dynamic business environment.

Important note: Menon Bearings 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.

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.