Larsen & Toubro Limited's (NSE:LT) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Larsen & Toubro's Annual General Meeting to take place on 4th of July
• Total pay for CEO SNS Subrahmanyan includes ₹36.0m salary
• The total compensation is 4,042% higher than the average for the industry
• Over the past three years, Larsen & Toubro's EPS grew by 24% and over the past three years, the total shareholder return was 149%

CEO SNS Subrahmanyan has done a decent job of delivering relatively good performance at Larsen & Toubro Limited (NSE:LT) recently. As shareholders go into the upcoming AGM on 4th of July, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Larsen & Toubro

Comparing Larsen & Toubro Limited's CEO Compensation With The Industry

According to our data, Larsen & Toubro Limited has a market capitalization of ₹4.9t, and paid its CEO total annual compensation worth ₹511m over the year to March 2024. We note that's an increase of 43% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹36m.

On comparing similar companies in the Indian Construction industry with market capitalizations above ₹668b, we found that the median total CEO compensation was ₹12m. This suggests that SNS Subrahmanyan is paid more than the median for the industry. Moreover, SNS Subrahmanyan also holds ₹303m worth of Larsen & Toubro stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹36m	₹32m	7%
Other	₹475m	₹325m	93%
Total Compensation	₹511m	₹357m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. In Larsen & Toubro'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.

A Look at Larsen & Toubro Limited's Growth Numbers

Over the past three years, Larsen & Toubro Limited has seen its earnings per share (EPS) grow by 24% per year. It achieved revenue growth of 21% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Larsen & Toubro Limited Been A Good Investment?

We think that the total shareholder return of 149%, over three years, would leave most Larsen & Toubro Limited shareholders smiling. 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...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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.

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. That's why we did our research, and identified 2 warning signs for Larsen & Toubro (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Larsen & Toubro, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com