Shareholders Will Probably Hold Off On Increasing Om Infra Limited's (NSE:OMINFRAL) CEO Compensation For The Time Being

Key Insights

• Om Infra's Annual General Meeting to take place on 29th of September
• Salary of ₹4.80m is part of CEO Vikas Kothari's total remuneration
• The total compensation is 65% higher than the average for the industry
• Over the past three years, Om Infra's EPS grew by 11% and over the past three years, the total shareholder return was 402%

CEO Vikas Kothari has done a decent job of delivering relatively good performance at Om Infra Limited (NSE:OMINFRAL) recently. As shareholders go into the upcoming AGM on 29th of September, 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 be hesitant of being overly generous with CEO compensation.

See our latest analysis for Om Infra

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

According to our data, Om Infra Limited has a market capitalization of ₹7.7b, and paid its CEO total annual compensation worth ₹5.0m over the year to March 2023. This was the same amount the CEO received in the prior year. We note that the salary portion, which stands at ₹4.80m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Construction industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹3.1m. Accordingly, our analysis reveals that Om Infra Limited pays Vikas Kothari north of the industry median. What's more, Vikas Kothari holds ₹141m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	₹4.8m	₹4.8m	95%
Other	₹240k	₹240k	5%
Total Compensation	₹5.0m	₹5.0m	100%

Speaking on an industry level, nearly 99% of total compensation represents salary, while the remainder of 1% is other remuneration. Om Infra pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Om Infra Limited's Growth Numbers

Om Infra Limited has seen its earnings per share (EPS) increase by 11% a year over the past three years. In the last year, its revenue is up 127%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Om Infra Limited Been A Good Investment?

Most shareholders would probably be pleased with Om Infra Limited for providing a total return of 402% over three years. 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.

To Conclude...

Vikas receives almost all of their compensation through a salary. 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. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Om Infra (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Om Infra 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.