Shareholders Will Probably Not Have Any Issues With Suprajit Engineering Limited's (NSE:SUPRAJIT) CEO Compensation

Key Insights

• Suprajit Engineering's Annual General Meeting to take place on 26th of September
• Salary of ₹19.6m is part of CEO Mohan Nagamangala's total remuneration
• The total compensation is similar to the average for the industry
• Suprajit Engineering's EPS declined by 4.6% over the past three years while total shareholder return over the past three years was 69%

Suprajit Engineering Limited (NSE:SUPRAJIT) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 26th of September. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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.

Check out our latest analysis for Suprajit Engineering

Comparing Suprajit Engineering Limited's CEO Compensation With The Industry

According to our data, Suprajit Engineering Limited has a market capitalization of ₹73b, and paid its CEO total annual compensation worth ₹28m over the year to March 2024. We note that's an increase of 8.3% above last year. We note that the salary portion, which stands at ₹19.6m 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 ₹33b and ₹134b had a median total CEO compensation of ₹38m. So it looks like Suprajit Engineering compensates Mohan Nagamangala in line with the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	₹20m	₹18m	70%
Other	₹8.3m	₹7.6m	30%
Total Compensation	₹28m	₹26m	100%

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. Suprajit Engineering is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 Suprajit Engineering Limited's Growth Numbers

Over the last three years, Suprajit Engineering Limited has shrunk its earnings per share by 4.6% per year. In the last year, its revenue is up 5.9%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Suprajit Engineering Limited Been A Good Investment?

Most shareholders would probably be pleased with Suprajit Engineering Limited for providing a total return of 69% over three years. 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.

In Summary...

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.

Whatever your view on compensation, you might want to check if insiders are buying or selling Suprajit Engineering shares (free trial).

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.