Shareholders Will Probably Hold Off On Increasing Elecon Engineering Company Limited's (NSE:ELECON) CEO Compensation For The Time Being

CEO Prayasvin Patel has done a decent job of delivering relatively good performance at Elecon Engineering Company Limited (NSE:ELECON) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 06 August 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Elecon Engineering

Comparing Elecon Engineering Company Limited's CEO Compensation With the industry

At the time of writing, our data shows that Elecon Engineering Company Limited has a market capitalization of ₹15b, and reported total annual CEO compensation of ₹31m for the year to March 2021. Notably, that's an increase of 13% over the year before. Notably, the salary which is ₹30.9m, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between ₹7.4b and ₹30b had a median total CEO compensation of ₹14m. Accordingly, our analysis reveals that Elecon Engineering Company Limited pays Prayasvin Patel north of the industry median. Furthermore, Prayasvin Patel directly owns ₹271m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹31m	₹27m	99%
Other	₹446k	₹703k	1%
Total Compensation	₹31m	₹28m	100%

Talking in terms of the industry, salary represented approximately 95% of total compensation out of all the companies we analyzed, while other remuneration made up 5% of the pie. Investors will find it interesting that Elecon Engineering pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Elecon Engineering Company Limited's Growth

Over the past three years, Elecon Engineering Company Limited has seen its earnings per share (EPS) grow by 97% per year. In the last year, its revenue is down 4.0%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Elecon Engineering Company Limited Been A Good Investment?

We think that the total shareholder return of 98%, over three years, would leave most Elecon Engineering Company 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.

In Summary...

Elecon Engineering pays its CEO a majority of compensation through a salary. Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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 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. That's why we did some digging and identified 2 warning signs for Elecon Engineering that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. 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.
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