Here's Why Shareholders May Want To Be Cautious With Increasing GMM Pfaudler Limited's (NSE:GMMPFAUDLR) CEO Pay Packet

Under the guidance of CEO Tarak Patel, GMM Pfaudler Limited (NSE:GMMPFAUDLR) has performed reasonably well recently. As shareholders go into the upcoming AGM on 13 August 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for GMM Pfaudler

Comparing GMM Pfaudler Limited's CEO Compensation With the industry

At the time of writing, our data shows that GMM Pfaudler Limited has a market capitalization of ₹68b, and reported total annual CEO compensation of ₹66m for the year to March 2021. Notably, that's an increase of 56% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹21m.

For comparison, other companies in the same industry with market capitalizations ranging between ₹30b and ₹119b had a median total CEO compensation of ₹44m. Accordingly, our analysis reveals that GMM Pfaudler Limited pays Tarak Patel north of the industry median. Furthermore, Tarak Patel directly owns ₹808m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹21m	₹8.5m	31%
Other	₹45m	₹34m	69%
Total Compensation	₹66m	₹42m	100%

Speaking on an industry level, nearly 90% of total compensation represents salary, while the remainder of 10% is other remuneration. GMM Pfaudler sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at GMM Pfaudler Limited's Growth Numbers

Over the past three years, GMM Pfaudler Limited has seen its earnings per share (EPS) grow by 20% per year. It achieved revenue growth of 69% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 GMM Pfaudler Limited Been A Good Investment?

Boasting a total shareholder return of 358% over three years, GMM Pfaudler Limited has done well by shareholders. 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...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

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. That's why we did some digging and identified 3 warning signs for GMM Pfaudler that you should be aware of before investing.

Switching gears from GMM Pfaudler, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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