This Is Why We Think Force Motors Limited's (NSE:FORCEMOT) CEO Might Get A Pay Rise Approved By Shareholders

Shareholders will be pleased by the robust performance of Force Motors Limited (NSE:FORCEMOT) recently and this will be kept in mind in the upcoming AGM on 28 September 2022. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for Force Motors

Comparing Force Motors Limited's CEO Compensation With The Industry

According to our data, Force Motors Limited has a market capitalization of ₹18b, and paid its CEO total annual compensation worth ₹9.5m over the year to March 2022. That's a notable increase of 50% on last year. In particular, the salary of ₹6.94m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from ₹8.0b to ₹32b, we found that the median CEO total compensation was ₹14m. In other words, Force Motors pays its CEO lower than the industry median. Furthermore, Prasan Singh Firodia directly owns ₹301m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	₹6.9m	₹3.7m	73%
Other	₹2.5m	₹2.6m	27%
Total Compensation	₹9.5m	₹6.3m	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Force Motors 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 Force Motors Limited's Growth Numbers

Over the last three years, Force Motors Limited has shrunk its earnings per share by 97% per year. It achieved revenue growth of 45% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Force Motors Limited Been A Good Investment?

Force Motors Limited has served shareholders reasonably well, with a total return of 18% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. 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 Force Motors that investors should think about before committing capital to this stock.

Important note: Force Motors 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.