Increases to Madhav Marbles and Granites Limited's (NSE:MADHAV) CEO Compensation Might Cool off for now

Key Insights

• Madhav Marbles and Granites will host its Annual General Meeting on 29th of September
• CEO Madhav Doshi's total compensation includes salary of ₹5.77m
• The total compensation is 62% higher than the average for the industry
• Over the past three years, Madhav Marbles and Granites' EPS fell by 100% and over the past three years, the total shareholder return was 103%

Despite strong share price growth of 103% for Madhav Marbles and Granites Limited (NSE:MADHAV) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 29th of September. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Madhav Marbles and Granites

Comparing Madhav Marbles and Granites Limited's CEO Compensation With The Industry

Our data indicates that Madhav Marbles and Granites Limited has a market capitalization of ₹466m, and total annual CEO compensation was reported as ₹7.5m for the year to March 2023. That's a notable increase of 8.8% on last year. We note that the salary portion, which stands at ₹5.77m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Building industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹4.6m. Hence, we can conclude that Madhav Doshi is remunerated higher than the industry median. Furthermore, Madhav Doshi directly owns ₹93m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹5.8m	₹5.8m	77%
Other	₹1.7m	₹1.1m	23%
Total Compensation	₹7.5m	₹6.9m	100%

On an industry level, roughly 97% of total compensation represents salary and 3% is other remuneration. Madhav Marbles and Granites pays a modest slice of remuneration through salary, as compared 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 Madhav Marbles and Granites Limited's Growth Numbers

Over the last three years, Madhav Marbles and Granites Limited has shrunk its earnings per share by 100% per year. In the last year, its revenue is down 17%.

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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Madhav Marbles and Granites Limited Been A Good Investment?

Boasting a total shareholder return of 103% over three years, Madhav Marbles and Granites Limited has done well by shareholders. 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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 Madhav Marbles and Granites that investors should think about before committing capital to this stock.

Important note: Madhav Marbles and Granites 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.

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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.