Shareholders Will Probably Hold Off On Increasing Rico Auto Industries Limited's (NSE:RICOAUTO) CEO Compensation For The Time Being

Key Insights

• Rico Auto Industries will host its Annual General Meeting on 29th of September
• CEO Arvind Kapur's total compensation includes salary of ₹90.9m
• The total compensation is 1,234% higher than the average for the industry
• Over the past three years, Rico Auto Industries' EPS grew by 94% and over the past three years, the total shareholder return was 187%

CEO Arvind Kapur has done a decent job of delivering relatively good performance at Rico Auto Industries Limited (NSE:RICOAUTO) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 29th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Rico Auto Industries

Comparing Rico Auto Industries Limited's CEO Compensation With The Industry

According to our data, Rico Auto Industries Limited has a market capitalization of ₹11b, and paid its CEO total annual compensation worth ₹99m over the year to March 2023. That's a notable increase of 24% on last year. In particular, the salary of ₹90.9m, makes up a huge portion of the total compensation being paid to 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 ₹7.4m. Hence, we can conclude that Arvind Kapur is remunerated higher than the industry median. Moreover, Arvind Kapur also holds ₹1.2b worth of Rico Auto Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹91m	₹66m	92%
Other	₹8.2m	₹14m	8%
Total Compensation	₹99m	₹80m	100%

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% 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 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 Rico Auto Industries Limited's Growth Numbers

Rico Auto Industries Limited's earnings per share (EPS) grew 94% per year over the last three years. It achieved revenue growth of 12% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Rico Auto Industries Limited Been A Good Investment?

We think that the total shareholder return of 187%, over three years, would leave most Rico Auto Industries Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which shouldn't be ignored) in Rico Auto Industries we think you should know about.

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.

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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.