We Think Some Shareholders May Hesitate To Increase Generic Engineering Construction and Projects Limited's (NSE:GENCON) CEO Compensation

Key Insights

• Generic Engineering Construction and Projects' Annual General Meeting to take place on 31st of December
• Total pay for CEO Manish Patel includes ₹6.00m salary
• The total compensation is 67% higher than the average for the industry
• Generic Engineering Construction and Projects' EPS declined by 13% over the past three years while total shareholder return over the past three years was 30%

Despite Generic Engineering Construction and Projects Limited's (NSE:GENCON) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 31st of December. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Generic Engineering Construction and Projects

How Does Total Compensation For Manish Patel Compare With Other Companies In The Industry?

At the time of writing, our data shows that Generic Engineering Construction and Projects Limited has a market capitalization of ₹2.4b, and reported total annual CEO compensation of ₹6.0m for the year to March 2024. There was no change in the compensation compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹6.0m.

In comparison with other companies in the Indian Construction industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹3.6m. Accordingly, our analysis reveals that Generic Engineering Construction and Projects Limited pays Manish Patel north of the industry median. What's more, Manish Patel holds ₹53m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹6.0m	₹6.0m	100%
Other	-	-	-
Total Compensation	₹6.0m	₹6.0m	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. Speaking on a company level, Generic Engineering Construction and Projects prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Generic Engineering Construction and Projects Limited's Growth Numbers

Over the last three years, Generic Engineering Construction and Projects Limited has shrunk its earnings per share by 13% per year. It achieved revenue growth of 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Generic Engineering Construction and Projects Limited Been A Good Investment?

Generic Engineering Construction and Projects Limited has generated a total shareholder return of 30% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Generic Engineering Construction and Projects pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Generic Engineering Construction and Projects that you should be aware of before investing.

Important note: Generic Engineering Construction and Projects 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.

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

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.