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

Key Insights

• HEG's Annual General Meeting to take place on 20th of August
• Salary of ₹33.6m is part of CEO Ravi Jhunjhunwala's total remuneration
• Total compensation is 415% above industry average
• HEG's EPS declined by 28% over the past three years while total shareholder return over the past three years was 105%

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The share price of HEG Limited (NSE:HEG) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 20th of August. 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.

See our latest analysis for HEG

Comparing HEG Limited's CEO Compensation With The Industry

At the time of writing, our data shows that HEG Limited has a market capitalization of ₹97b, and reported total annual CEO compensation of ₹110m for the year to March 2025. That's a notable decrease of 19% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹34m.

On comparing similar companies from the Indian Electrical industry with market caps ranging from ₹35b to ₹140b, we found that the median CEO total compensation was ₹21m. Accordingly, our analysis reveals that HEG Limited pays Ravi Jhunjhunwala north of the industry median. What's more, Ravi Jhunjhunwala holds ₹6.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 83% of total compensation out of all the companies we analyzed, while other remuneration made up 17% of the pie. HEG pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at HEG Limited's Growth Numbers

Over the last three years, HEG Limited has shrunk its earnings per share by 28% per year. It saw its revenue drop 3.9% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has HEG Limited Been A Good Investment?

Boasting a total shareholder return of 105% over three years, HEG Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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 CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for HEG that investors should look into moving forward.

Switching gears from HEG, 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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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.