TVS Srichakra Limited's (NSE:TVSSRICHAK) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• TVS Srichakra will host its Annual General Meeting on 12th of September
• Salary of ₹54.9m is part of CEO Shobhana Ramachandhran's total remuneration
• The total compensation is 171% higher than the average for the industry
• Over the past three years, TVS Srichakra's EPS fell by 5.9% and over the past three years, the total shareholder return was 122%

The share price of TVS Srichakra Limited (NSE:TVSSRICHAK) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 12th of September. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for TVS Srichakra

Comparing TVS Srichakra Limited's CEO Compensation With The Industry

Our data indicates that TVS Srichakra Limited has a market capitalization of ₹35b, and total annual CEO compensation was reported as ₹77m for the year to March 2024. Notably, that's an increase of 37% over the year before. We note that the salary portion, which stands at ₹54.9m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Auto Components industry with market capitalizations ranging from ₹17b to ₹67b, the reported median CEO total compensation was ₹28m. Accordingly, our analysis reveals that TVS Srichakra Limited pays Shobhana Ramachandhran north of the industry median. Moreover, Shobhana Ramachandhran also holds ₹1.3b worth of TVS Srichakra stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹55m	₹38m	72%
Other	₹22m	₹18m	28%
Total Compensation	₹77m	₹56m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Although there is a difference in how total compensation is set, TVS Srichakra more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

TVS Srichakra Limited's Growth

Over the last three years, TVS Srichakra Limited has shrunk its earnings per share by 5.9% per year. Its revenue is up 1.7% over the last year.

Overall this is not a very positive result for shareholders. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has TVS Srichakra Limited Been A Good Investment?

Most shareholders would probably be pleased with TVS Srichakra Limited for providing a total return of 122% 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...

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. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for TVS Srichakra that investors should be aware of in a dynamic business environment.

Important note: TVS Srichakra 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.