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

Key Insights

• Isgec Heavy Engineering to hold its Annual General Meeting on 28th of August
• Salary of ₹12.0m is part of CEO Aditya Puri's total remuneration
• Total compensation is 119% above industry average
• Over the past three years, Isgec Heavy Engineering's EPS grew by 5.5% and over the past three years, the total shareholder return was 114%

Performance at Isgec Heavy Engineering Limited (NSE:ISGEC) has been reasonably good and CEO Aditya Puri has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 28th of August. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Isgec Heavy Engineering

Comparing Isgec Heavy Engineering Limited's CEO Compensation With The Industry

According to our data, Isgec Heavy Engineering Limited has a market capitalization of ₹108b, and paid its CEO total annual compensation worth ₹84m over the year to March 2024. Notably, that's an increase of 24% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹12m.

In comparison with other companies in the Indian Machinery industry with market capitalizations ranging from ₹84b to ₹269b, the reported median CEO total compensation was ₹38m. Hence, we can conclude that Aditya Puri is remunerated higher than the industry median. Furthermore, Aditya Puri directly owns ₹6.7b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹12m	₹12m	14%
Other	₹72m	₹56m	86%
Total Compensation	₹84m	₹68m	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. In Isgec Heavy Engineering's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Isgec Heavy Engineering Limited's Growth

Isgec Heavy Engineering Limited has seen its earnings per share (EPS) increase by 5.5% a year over the past three years. In the last year, its revenue is down 2.5%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Isgec Heavy Engineering Limited Been A Good Investment?

Boasting a total shareholder return of 114% over three years, Isgec Heavy Engineering 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...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Isgec Heavy Engineering that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.