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

Key Insights

• LMW to hold its Annual General Meeting on 17th of July
• Total pay for CEO Sanjay Jayavarthanavelu includes ₹18.6m salary
• The overall pay is 109% above the industry average
• Over the past three years, LMW's EPS fell by 17% and over the past three years, the total shareholder return was 73%

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LMW Limited (NSE:LMW) 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. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 17th of July. 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 LMW

How Does Total Compensation For Sanjay Jayavarthanavelu Compare With Other Companies In The Industry?

At the time of writing, our data shows that LMW Limited has a market capitalization of ₹176b, and reported total annual CEO compensation of ₹76m for the year to March 2025. That's a notable decrease of 65% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹19m.

In comparison with other companies in the Indian Machinery industry with market capitalizations ranging from ₹86b to ₹274b, the reported median CEO total compensation was ₹36m. This suggests that Sanjay Jayavarthanavelu is paid more than the median for the industry. What's more, Sanjay Jayavarthanavelu holds ₹2.4b 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 91% of total compensation out of all the companies we analyzed, while other remuneration made up 9% of the pie. It's interesting to note that LMW allocates a smaller portion of compensation to salary in comparison 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 LMW Limited's Growth Numbers

Over the last three years, LMW Limited has shrunk its earnings per share by 17% per year. In the last year, its revenue is down 36%.

Overall this is not a very positive result for shareholders. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has LMW Limited Been A Good Investment?

Most shareholders would probably be pleased with LMW Limited for providing a total return of 73% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. 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 it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for LMW that investors should look into moving forward.

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.