Here's Why It's Unlikely That Gillanders Arbuthnot and Company Limited's (NSE:GILLANDERS) CEO Will See A Pay Rise This Year

Gillanders Arbuthnot and Company Limited (NSE:GILLANDERS) has not performed well recently and CEO Manoj Sodhani will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 13 August 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Gillanders Arbuthnot

How Does Total Compensation For Manoj Sodhani Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gillanders Arbuthnot and Company Limited has a market capitalization of ₹1.2b, and reported total annual CEO compensation of ₹7.3m for the year to March 2021. We note that's a decrease of 18% compared to last year. We note that the salary portion, which stands at ₹6.65m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹9.3m. This suggests that Gillanders Arbuthnot remunerates its CEO largely in line with the industry average.

Component	2021	2020	Proportion (2021)
Salary	₹6.6m	₹7.8m	91%
Other	₹631k	₹1.1m	9%
Total Compensation	₹7.3m	₹8.9m	100%

On an industry level, around 71% of total compensation represents salary and 29% is other remuneration. Gillanders Arbuthnot pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Gillanders Arbuthnot and Company Limited's Growth Numbers

Over the last three years, Gillanders Arbuthnot and Company Limited has shrunk its earnings per share by 56% per year. In the last year, its revenue is down 35%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Gillanders Arbuthnot and Company Limited Been A Good Investment?

Given the total shareholder loss of 10% over three years, many shareholders in Gillanders Arbuthnot and Company Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Gillanders Arbuthnot that you should be aware of before investing.

Important note: Gillanders Arbuthnot 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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