Shareholders Would Not Be Objecting To Electrosteel Castings Limited's (NSE:ELECTCAST) CEO Compensation And Here's Why

Key Insights

• Electrosteel Castings' Annual General Meeting to take place on 23rd of August
• Total pay for CEO Sunil Katial includes ₹9.43m salary
• The overall pay is comparable to the industry average
• Electrosteel Castings' total shareholder return over the past three years was 506% while its EPS grew by 51% over the past three years

We have been pretty impressed with the performance at Electrosteel Castings Limited (NSE:ELECTCAST) recently and CEO Sunil Katial deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 23rd of August. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Electrosteel Castings

How Does Total Compensation For Sunil Katial Compare With Other Companies In The Industry?

According to our data, Electrosteel Castings Limited has a market capitalization of ₹124b, and paid its CEO total annual compensation worth ₹30m over the year to March 2024. Notably, that's an increase of 17% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹9.4m.

On examining similar-sized companies in the Indian Building industry with market capitalizations between ₹84b and ₹269b, we discovered that the median CEO total compensation of that group was ₹30m. From this we gather that Sunil Katial is paid around the median for CEOs in the industry.

Component	2024	2023	Proportion (2024)
Salary	₹9.4m	₹8.6m	32%
Other	₹20m	₹17m	68%
Total Compensation	₹30m	₹25m	100%

On an industry level, around 87% of total compensation represents salary and 13% is other remuneration. Electrosteel Castings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Electrosteel Castings Limited's Growth

Over the past three years, Electrosteel Castings Limited has seen its earnings per share (EPS) grow by 51% per year. In the last year, its revenue is up 8.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Electrosteel Castings Limited Been A Good Investment?

Boasting a total shareholder return of 506% over three years, Electrosteel Castings Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Electrosteel Castings that you should be aware of before investing.

Important note: Electrosteel Castings 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.