Shareholders May Be More Conservative With Shivam Autotech Limited's (NSE:SHIVAMAUTO) CEO Compensation For Now

Key Insights

• Shivam Autotech will host its Annual General Meeting on 26th of September
• Salary of ₹9.60m is part of CEO Neeraj Munjal's total remuneration
• The total compensation is 172% higher than the average for the industry
• Shivam Autotech's total shareholder return over the past three years was 125% while its EPS was down 52% over the past three years

Despite strong share price growth of 125% for Shivam Autotech Limited (NSE:SHIVAMAUTO) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 26th of September. 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 Shivam Autotech

Comparing Shivam Autotech Limited's CEO Compensation With The Industry

Our data indicates that Shivam Autotech Limited has a market capitalization of ₹5.8b, and total annual CEO compensation was reported as ₹18m for the year to March 2024. That is, the compensation was roughly the same as last year. We note that the salary of ₹9.60m makes up a sizeable portion of the total compensation received by the CEO.

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 Neeraj Munjal is remunerated higher than the industry median.

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. It's interesting to note that Shivam Autotech allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Shivam Autotech Limited's Growth

Over the last three years, Shivam Autotech Limited has shrunk its earnings per share by 52% per year. Its revenue is up 3.3% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Shivam Autotech Limited Been A Good Investment?

We think that the total shareholder return of 125%, over three years, would leave most Shivam Autotech Limited shareholders smiling. 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...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

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 3 warning signs for Shivam Autotech (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Shivam Autotech 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.

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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.