We Think Some Shareholders May Hesitate To Increase GE Power India Limited's (NSE:GEPIL) CEO Compensation

Key Insights

• GE Power India's Annual General Meeting to take place on 23rd of July
• Total pay for CEO Prashant Jain includes ₹9.40m salary
• The overall pay is 347% above the industry average
• Over the past three years, GE Power India's EPS fell by 53% and over the past three years, the total shareholder return was 51%

Despite strong share price growth of 51% for GE Power India Limited (NSE:GEPIL) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 23rd of July may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. 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. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for GE Power India

How Does Total Compensation For Prashant Jain Compare With Other Companies In The Industry?

According to our data, GE Power India Limited has a market capitalization of ₹33b, and paid its CEO total annual compensation worth ₹73m over the year to March 2024. We note that's an increase of 46% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹9.4m.

In comparison with other companies in the Indian Construction industry with market capitalizations ranging from ₹17b to ₹67b, the reported median CEO total compensation was ₹16m. Hence, we can conclude that Prashant Jain is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹9.4m	₹8.1m	13%
Other	₹63m	₹42m	87%
Total Compensation	₹73m	₹50m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. In GE Power India's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

GE Power India Limited's Growth

GE Power India Limited has reduced its earnings per share by 53% a year over the last three years. In the last year, its revenue is down 10%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has GE Power India Limited Been A Good Investment?

Most shareholders would probably be pleased with GE Power India Limited for providing a total return of 51% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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. We did our research and spotted 2 warning signs for GE Power India that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

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