This Is The Reason Why We Think Garden Reach Shipbuilders & Engineers Limited's (NSE:GRSE) CEO Deserves A Bump Up To Their Compensation

Key Insights

• Garden Reach Shipbuilders & Engineers will host its Annual General Meeting on 22nd of September
• Salary of ₹4.85m is part of CEO P. Hari's total remuneration
• Total compensation is 94% below industry average
• Over the past three years, Garden Reach Shipbuilders & Engineers' EPS grew by 26% and over the past three years, the total shareholder return was 395%

The solid performance at Garden Reach Shipbuilders & Engineers Limited (NSE:GRSE) has been impressive and shareholders will probably be pleased to know that CEO P. Hari has delivered. This would be kept in mind at the upcoming AGM on 22nd of September which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

See our latest analysis for Garden Reach Shipbuilders & Engineers

Comparing Garden Reach Shipbuilders & Engineers Limited's CEO Compensation With The Industry

Our data indicates that Garden Reach Shipbuilders & Engineers Limited has a market capitalization of ₹97b, and total annual CEO compensation was reported as ₹6.8m for the year to March 2023. Notably, that's an increase of 21% over the year before. We note that the salary portion, which stands at ₹4.85m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Aerospace & Defense industry with market capitalizations ranging from ₹33b to ₹133b, the reported median CEO total compensation was ₹121m. This suggests that P. Hari is paid below the industry median.

Component	2023	2022	Proportion (2023)
Salary	₹4.8m	₹4.2m	71%
Other	₹2.0m	₹1.4m	29%
Total Compensation	₹6.8m	₹5.6m	100%

On an industry level, around 97% of total compensation represents salary and 3% is other remuneration. Garden Reach Shipbuilders & Engineers pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Garden Reach Shipbuilders & Engineers Limited's Growth Numbers

Garden Reach Shipbuilders & Engineers Limited has seen its earnings per share (EPS) increase by 26% a year over the past three years. In the last year, its revenue is up 35%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Garden Reach Shipbuilders & Engineers Limited Been A Good Investment?

Boasting a total shareholder return of 395% over three years, Garden Reach Shipbuilders & Engineers Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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 Garden Reach Shipbuilders & Engineers that investors should think about before committing capital to this stock.

Important note: Garden Reach Shipbuilders & Engineers 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.