We Take A Look At Why Indo Tech Transformers Limited's (NSE:INDOTECH) CEO Compensation Is Well Earned

Key Insights

• Indo Tech Transformers to hold its Annual General Meeting on 27th of September
• Total pay for CEO Shridhar Gokhale includes ₹9.56m salary
• Total compensation is similar to the industry average
• Indo Tech Transformers' EPS grew by 103% over the past three years while total shareholder return over the past three years was 1,139%

The performance at Indo Tech Transformers Limited (NSE:INDOTECH) has been quite strong recently and CEO Shridhar Gokhale has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 27th of September. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for Indo Tech Transformers

How Does Total Compensation For Shridhar Gokhale Compare With Other Companies In The Industry?

At the time of writing, our data shows that Indo Tech Transformers Limited has a market capitalization of ₹20b, and reported total annual CEO compensation of ₹9.6m for the year to March 2024. That's a notable increase of 24% on last year. Notably, the salary of ₹9.6m is the entirety of the CEO compensation.

On comparing similar companies from the Indian Electrical industry with market caps ranging from ₹8.4b to ₹33b, we found that the median CEO total compensation was ₹12m. This suggests that Indo Tech Transformers remunerates its CEO largely in line with the industry average. Furthermore, Shridhar Gokhale directly owns ₹9.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹9.6m	₹7.7m	100%
Other	-	-	-
Total Compensation	₹9.6m	₹7.7m	100%

On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. At the company level, Indo Tech Transformers pays Shridhar Gokhale solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Indo Tech Transformers Limited's Growth

Over the past three years, Indo Tech Transformers Limited has seen its earnings per share (EPS) grow by 103% per year. Its revenue is up 20% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Indo Tech Transformers Limited Been A Good Investment?

Boasting a total shareholder return of 1,139% over three years, Indo Tech Transformers 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.

To Conclude...

Indo Tech Transformers pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Indo Tech Transformers that investors should look into moving forward.

Important note: Indo Tech Transformers 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.

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.