This Is The Reason Why We Think AIA Engineering Limited's (NSE:AIAENG) CEO Deserves A Bump Up To Their Compensation

Key Insights

• AIA Engineering will host its Annual General Meeting on 19th of September
• CEO Bhadresh Shah's total compensation includes salary of ₹10.2m
• Total compensation is 77% below industry average
• AIA Engineering's total shareholder return over the past three years was 104% while its EPS grew by 25% over the past three years

The impressive results at AIA Engineering Limited (NSE:AIAENG) recently will be great news for shareholders. This would be kept in mind at the upcoming AGM on 19th of September which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for AIA Engineering

Comparing AIA Engineering Limited's CEO Compensation With The Industry

According to our data, AIA Engineering Limited has a market capitalization of ₹347b, and paid its CEO total annual compensation worth ₹11m over the year to March 2023. We note that's an increase of 16% above last year. In particular, the salary of ₹10.2m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Indian Machinery industry with market caps ranging from ₹166b to ₹531b, we found that the median CEO total compensation was ₹48m. This suggests that Bhadresh Shah is paid below the industry median. Furthermore, Bhadresh Shah directly owns ₹203b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹10m	₹8.7m	92%
Other	₹912k	₹889k	8%
Total Compensation	₹11m	₹9.6m	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. AIA Engineering is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

AIA Engineering Limited's Growth

Over the past three years, AIA Engineering Limited has seen its earnings per share (EPS) grow by 25% per year. In the last year, its revenue is up 30%.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast 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 AIA Engineering Limited Been A Good Investment?

Boasting a total shareholder return of 104% over three years, AIA Engineering Limited has done well by shareholders. 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...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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 AIA Engineering that you should be aware of before investing.

Switching gears from AIA 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.