Kothari Products Limited's (NSE:KOTHARIPRO) CEO Compensation Is Looking A Bit Stretched At The Moment

Kothari Products Limited (NSE:KOTHARIPRO) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 30 September 2022 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Kothari Products

How Does Total Compensation For Deepak Kothari Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kothari Products Limited has a market capitalization of ₹3.7b, and reported total annual CEO compensation of ₹4.8m for the year to March 2022. That is, the compensation was roughly the same as last year. We note that the salary of ₹2.40m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹16b, we found that the median total CEO compensation was ₹1.2m. Accordingly, our analysis reveals that Kothari Products Limited pays Deepak Kothari north of the industry median. Moreover, Deepak Kothari also holds ₹2.0b worth of Kothari Products stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹2.4m	₹2.4m	50%
Other	₹2.4m	₹2.3m	50%
Total Compensation	₹4.8m	₹4.7m	100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. In Kothari Products' case, non-salary compensation represents a greater slice of total remuneration, in comparison 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 Kothari Products Limited's Growth Numbers

Kothari Products Limited has reduced its earnings per share by 57% a year over the last three years. It saw its revenue drop 43% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Kothari Products Limited Been A Good Investment?

We think that the total shareholder return of 97%, over three years, would leave most Kothari Products Limited shareholders smiling. 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...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Kothari Products (1 is a bit concerning!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.