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

Key Insights

• Elecon Engineering to hold its Annual General Meeting on 25th of June
• CEO Prayasvin Patel's total compensation includes salary of ₹42.2m
• The overall pay is 258% above the industry average
• Elecon Engineering's EPS grew by 83% over the past three years while total shareholder return over the past three years was 885%

Under the guidance of CEO Prayasvin Patel, Elecon Engineering Company Limited (NSE:ELECON) has performed reasonably well recently. As shareholders go into the upcoming AGM on 25th of June, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. 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

According to our data, Elecon Engineering Company Limited has a market capitalization of ₹146b, and paid its CEO total annual compensation worth ₹193m over the year to March 2024. We note that's an increase of 60% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹42m.

For comparison, other companies in the Indian Electrical industry with market capitalizations ranging between ₹83b and ₹267b had a median total CEO compensation of ₹54m. Accordingly, our analysis reveals that Elecon Engineering Company Limited pays Prayasvin Patel north of the industry median. Moreover, Prayasvin Patel also holds ₹3.4b worth of Elecon Engineering stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹42m	₹30m	22%
Other	₹151m	₹91m	78%
Total Compensation	₹193m	₹121m	100%

Speaking on an industry level, nearly 83% of total compensation represents salary, while the remainder of 17% is other remuneration. It's interesting to note that Elecon Engineering allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Elecon Engineering Company Limited's Growth Numbers

Over the past three years, Elecon Engineering Company Limited has seen its earnings per share (EPS) grow by 83% per year. It achieved revenue growth of 27% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. 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 Elecon Engineering Company Limited Been A Good Investment?

Boasting a total shareholder return of 885% over three years, Elecon Engineering Company Limited has done well by shareholders. 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...

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.

Important note: Elecon 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com