Shareholders May Not Be So Generous With Varroc Engineering Limited's (NSE:VARROC) CEO Compensation And Here's Why

Key Insights

• Varroc Engineering will host its Annual General Meeting on 13th of September
• Salary of ₹52.3m is part of CEO Tarang Jain's total remuneration
• Total compensation is 35% above industry average
• Varroc Engineering's EPS grew by 60% over the past three years while total shareholder return over the past three years was 39%

Performance at Varroc Engineering Limited (NSE:VARROC) has been reasonably good and CEO Tarang Jain has done a decent job of steering the company in the right direction. 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 13th of September. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Varroc Engineering

Comparing Varroc Engineering Limited's CEO Compensation With The Industry

According to our data, Varroc Engineering Limited has a market capitalization of ₹64b, and paid its CEO total annual compensation worth ₹52m over the year to March 2023. This was the same amount the CEO received in the prior year. Notably, the salary of ₹52m is the entirety of the CEO compensation.

For comparison, other companies in the Indian Auto Components industry with market capitalizations ranging between ₹33b and ₹133b had a median total CEO compensation of ₹39m. Hence, we can conclude that Tarang Jain is remunerated higher than the industry median. Moreover, Tarang Jain also holds ₹44b worth of Varroc Engineering stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹52m	₹52m	100%
Other	-	-	-
Total Compensation	₹52m	₹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. Speaking on a company level, Varroc Engineering prefers to tread along a traditional path, disbursing all compensation through a salary. 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 Varroc Engineering Limited's Growth Numbers

Varroc Engineering Limited has seen its earnings per share (EPS) increase by 60% a year over the past three years. In the last year, its revenue is up 12%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Varroc Engineering Limited Been A Good Investment?

Most shareholders would probably be pleased with Varroc Engineering Limited for providing a total return of 39% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Varroc Engineering rewards its CEO solely through a salary, ignoring non-salary benefits completely. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. 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.

Switching gears from Varroc Engineering, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.