This Is The Reason Why We Think Swelect Energy Systems Limited's (NSE:SWELECTES) CEO Might Be Underpaid

Key Insights

• Swelect Energy Systems will host its Annual General Meeting on 29th of July
• CEO Arthanari Balan's total compensation includes salary of ₹3.00m
• Total compensation is 54% below industry average
• Over the past three years, Swelect Energy Systems' EPS grew by 26% and over the past three years, the total shareholder return was 373%

The solid performance at Swelect Energy Systems Limited (NSE:SWELECTES) has been impressive and shareholders will probably be pleased to know that CEO Arthanari Balan has delivered. At the upcoming AGM on 29th of July, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Swelect Energy Systems

How Does Total Compensation For Arthanari Balan Compare With Other Companies In The Industry?

Our data indicates that Swelect Energy Systems Limited has a market capitalization of ₹18b, and total annual CEO compensation was reported as ₹4.5m for the year to March 2024. This was the same amount the CEO received in the prior year. Notably, the salary which is ₹3.00m, represents most of the total compensation being paid.

On examining similar-sized companies in the Indian Electrical industry with market capitalizations between ₹8.4b and ₹33b, we discovered that the median CEO total compensation of that group was ₹9.8m. In other words, Swelect Energy Systems pays its CEO lower than the industry median. What's more, Arthanari Balan holds ₹551m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2024	Proportion (2024)
Salary	₹3.0m	₹3.0m	67%
Other	₹1.5m	₹1.5m	33%
Total Compensation	₹4.5m	₹4.5m	100%

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Swelect Energy Systems pays a modest slice of remuneration through salary, as compared 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.

Swelect Energy Systems Limited's Growth

Swelect Energy Systems Limited's earnings per share (EPS) grew 26% per year over the last three years. Its revenue is down 1.2% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 Swelect Energy Systems Limited Been A Good Investment?

We think that the total shareholder return of 373%, over three years, would leave most Swelect Energy Systems 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...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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 3 warning signs for Swelect Energy Systems (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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