Shareholders Would Not Be Objecting To Schaeffler India Limited's (NSE:SCHAEFFLER) CEO Compensation And Here's Why

Key Insights

• Schaeffler India's Annual General Meeting to take place on 26th of April
• CEO Harsha Kadam's total compensation includes salary of ₹31.2m
• The overall pay is comparable to the industry average
• Over the past three years, Schaeffler India's EPS grew by 46% and over the past three years, the total shareholder return was 236%

We have been pretty impressed with the performance at Schaeffler India Limited (NSE:SCHAEFFLER) recently and CEO Harsha Kadam deserves a mention for their role in it. Coming up to the next AGM on 26th of April, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for Schaeffler India

How Does Total Compensation For Harsha Kadam Compare With Other Companies In The Industry?

At the time of writing, our data shows that Schaeffler India Limited has a market capitalization of ₹509b, and reported total annual CEO compensation of ₹41m for the year to December 2023. Notably, that's an increase of 37% over the year before. In particular, the salary of ₹31.2m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Indian Machinery industry with market capitalizations ranging from ₹334b to ₹1.0t, the reported median CEO total compensation was ₹42m. So it looks like Schaeffler India compensates Harsha Kadam in line with the median for the industry. Moreover, Harsha Kadam also holds ₹1.6m worth of Schaeffler India stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹31m	₹22m	76%
Other	₹10m	₹8.5m	24%
Total Compensation	₹41m	₹30m	100%

Talking in terms of the industry, salary represented approximately 92% of total compensation out of all the companies we analyzed, while other remuneration made up 8% of the pie. In Schaeffler India's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Schaeffler India Limited's Growth

Over the past three years, Schaeffler India Limited has seen its earnings per share (EPS) grow by 46% per year. In the last year, its revenue is up 5.6%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Schaeffler India Limited Been A Good Investment?

We think that the total shareholder return of 236%, over three years, would leave most Schaeffler India 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...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

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 1 warning sign for Schaeffler India that you should be aware of before investing.

Important note: Schaeffler India 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.

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

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.