Increases to CEO Compensation Might Be Put On Hold For Now at Varroc Engineering Limited (NSE:VARROC)

Key Insights

• Varroc Engineering will host its Annual General Meeting on 12th of September
• CEO Tarang Jain's total compensation includes salary of ₹64.1m
• Total compensation is 95% above industry average
• Over the past three years, Varroc Engineering's EPS grew by 130% and over the past three years, the total shareholder return was 115%

Under the guidance of CEO Tarang Jain, Varroc Engineering Limited (NSE:VARROC) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 12th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Varroc Engineering

How Does Total Compensation For Tarang Jain Compare With Other Companies In The Industry?

According to our data, Varroc Engineering Limited has a market capitalization of ₹90b, and paid its CEO total annual compensation worth ₹64m over the year to March 2024. We note that's an increase of 23% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹64m.

In comparison with other companies in the Indian Auto Components industry with market capitalizations ranging from ₹34b to ₹134b, the reported median CEO total compensation was ₹33m. Accordingly, our analysis reveals that Varroc Engineering Limited pays Tarang Jain north of the industry median. Furthermore, Tarang Jain directly owns ₹56b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹64m	₹52m	100%
Other	-	-	-
Total Compensation	₹64m	₹52m	100%

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. At the company level, Varroc Engineering pays Tarang Jain solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Varroc Engineering Limited's Growth

Varroc Engineering Limited has seen its earnings per share (EPS) increase by 130% a year over the past three years. In the last year, its revenue is up 9.0%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Varroc Engineering Limited Been A Good Investment?

We think that the total shareholder return of 115%, over three years, would leave most Varroc Engineering 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...

Varroc Engineering pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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, 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Varroc Engineering that investors should think about before committing capital to this stock.

Important note: Varroc Engineering 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.