Shareholders May Not Be So Generous With Munjal Auto Industries Limited's (NSE:MUNJALAU) CEO Compensation And Here's Why

Key Insights

• Munjal Auto Industries' Annual General Meeting to take place on 26th of September
• CEO Sudhir Kumar Munjal's total compensation includes salary of ₹24.0m
• The total compensation is 705% higher than the average for the industry
• Munjal Auto Industries' EPS grew by 2.4% over the past three years while total shareholder return over the past three years was 125%

Performance at Munjal Auto Industries Limited (NSE:MUNJALAU) has been reasonably good and CEO Sudhir Kumar Munjal has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 26th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Munjal Auto Industries

How Does Total Compensation For Sudhir Kumar Munjal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Munjal Auto Industries Limited has a market capitalization of ₹12b, and reported total annual CEO compensation of ₹54m for the year to March 2024. There was no change in the compensation compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹24m.

In comparison with other companies in the Indian Auto Components industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹6.8m. Hence, we can conclude that Sudhir Kumar Munjal is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹24m	₹24m	44%
Other	₹30m	₹30m	56%
Total Compensation	₹54m	₹54m	100%

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. In Munjal Auto Industries' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Munjal Auto Industries Limited's Growth

Over the past three years, Munjal Auto Industries Limited has seen its earnings per share (EPS) grow by 2.4% per year. It saw its revenue drop 6.4% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Munjal Auto Industries Limited Been A Good Investment?

Most shareholders would probably be pleased with Munjal Auto Industries Limited for providing a total return of 125% 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 decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Munjal Auto Industries that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.