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

Key Insights

• Rico Auto Industries' Annual General Meeting to take place on 16th of September
• Total pay for CEO Arvind Kapur includes ₹87.3m salary
• Total compensation is 258% above industry average
• Over the past three years, Rico Auto Industries' EPS fell by 1.6% and over the past three years, the total shareholder return was 81%

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Despite strong share price growth of 81% for Rico Auto Industries Limited (NSE:RICOAUTO) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 16th of September may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Rico Auto Industries

How Does Total Compensation For Arvind Kapur Compare With Other Companies In The Industry?

Our data indicates that Rico Auto Industries Limited has a market capitalization of ₹14b, and total annual CEO compensation was reported as ₹98m for the year to March 2025. That's a modest increase of 5.7% on the prior year. We note that the salary portion, which stands at ₹87.3m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Indian Auto Components industry with market capitalizations ranging between ₹8.8b and ₹35b had a median total CEO compensation of ₹27m. This suggests that Arvind Kapur is paid more than the median for the industry. Furthermore, Arvind Kapur directly owns ₹1.5b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2025	2024	Proportion (2025)
Salary	₹87m	₹78m	89%
Other	₹11m	₹15m	11%
Total Compensation	₹98m	₹93m	100%

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. According to our research, Rico Auto Industries 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 Rico Auto Industries Limited's Growth Numbers

Rico Auto Industries Limited has reduced its earnings per share by 1.6% a year over the last three years. In the last year, its revenue is up 2.3%.

The lack of EPS growth is certainly uninspiring. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Rico Auto Industries Limited Been A Good Investment?

Boasting a total shareholder return of 81% over three years, Rico Auto Industries Limited has done well by shareholders. 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...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Rico Auto Industries (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Rico Auto Industries, 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. 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.