We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Rico Auto Industries Limited's (NSE:RICOAUTO) CEO For Now

Key Insights

• Rico Auto Industries' Annual General Meeting to take place on 27th of September
• Salary of ₹78.0m is part of CEO Arvind Kapur's total remuneration
• The total compensation is 224% higher than the average for the industry
• Over the past three years, Rico Auto Industries' EPS grew by 63% and over the past three years, the total shareholder return was 153%

CEO Arvind Kapur has done a decent job of delivering relatively good performance at Rico Auto Industries Limited (NSE:RICOAUTO) recently. As shareholders go into the upcoming AGM on 27th of September, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Rico Auto Industries

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

According to our data, Rico Auto Industries Limited has a market capitalization of ₹16b, and paid its CEO total annual compensation worth ₹93m over the year to March 2024. That's slightly lower by 6.3% over the previous year. In particular, the salary of ₹78.0m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Indian Auto Components industry with market capitalizations ranging between ₹8.4b and ₹33b had a median total CEO compensation of ₹29m. Accordingly, our analysis reveals that Rico Auto Industries Limited pays Arvind Kapur north of the industry median. What's more, Arvind Kapur holds ₹1.7b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹78m	₹91m	84%
Other	₹15m	₹8.2m	16%
Total Compensation	₹93m	₹99m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. There isn't a significant difference between Rico Auto Industries and the broader market, in terms of salary allocation in the overall compensation package. 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.

Rico Auto Industries Limited's Growth

Over the past three years, Rico Auto Industries Limited has seen its earnings per share (EPS) grow by 63% per year. Its revenue is down 4.7% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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?

Most shareholders would probably be pleased with Rico Auto Industries Limited for providing a total return of 153% 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.

In Summary...

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, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Rico Auto Industries (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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.