Here's Why Shareholders May Want To Be Cautious With Increasing Ashoka Buildcon Limited's (NSE:ASHOKA) CEO Pay Packet

In the past three years, the share price of Ashoka Buildcon Limited (NSE:ASHOKA) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 23 September 2022. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Ashoka Buildcon

How Does Total Compensation For Satish Parakh Compare With Other Companies In The Industry?

Our data indicates that Ashoka Buildcon Limited has a market capitalization of ₹24b, and total annual CEO compensation was reported as ₹46m for the year to March 2022. We note that's a decrease of 17% compared to last year. Notably, the salary which is ₹37.4m, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between ₹16b and ₹64b had a median total CEO compensation of ₹32m. Hence, we can conclude that Satish Parakh is remunerated higher than the industry median. Furthermore, Satish Parakh directly owns ₹4.4b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	₹37m	₹47m	82%
Other	₹8.4m	₹8.4m	18%
Total Compensation	₹46m	₹55m	100%

Talking in terms of the industry, salary represented approximately 99% of total compensation out of all the companies we analyzed, while other remuneration made up 1% of the pie. Ashoka Buildcon sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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 Ashoka Buildcon Limited's Growth Numbers

Over the past three years, Ashoka Buildcon Limited has seen its earnings per share (EPS) grow by 89% per year. In the last year, its revenue is up 19%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Ashoka Buildcon Limited Been A Good Investment?

Given the total shareholder loss of 22% over three years, many shareholders in Ashoka Buildcon Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Ashoka Buildcon (1 is potentially serious!) that you should be aware of before investing here.

Important note: Ashoka Buildcon 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.