Increases to TIL Limited's (NSE:TIL) CEO Compensation Might Cool off for now

Key Insights

• TIL will host its Annual General Meeting on 26th of September
• Total pay for CEO Sumit Mazumder includes ₹18.3m salary
• Total compensation is 405% above industry average
• Over the past three years, TIL's EPS fell by 42% and over the past three years, the total shareholder return was 108%

TIL Limited (NSE:TIL) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 26th 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. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for TIL

Comparing TIL Limited's CEO Compensation With The Industry

At the time of writing, our data shows that TIL Limited has a market capitalization of ₹2.9b, and reported total annual CEO compensation of ₹25m for the year to March 2023. That's a modest increase of 6.8% on the prior year. We note that the salary portion, which stands at ₹18.3m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Machinery industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹4.9m. Accordingly, our analysis reveals that TIL Limited pays Sumit Mazumder north of the industry median. What's more, Sumit Mazumder holds ₹225m 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	₹18m	₹16m	74%
Other	₹6.4m	₹6.7m	26%
Total Compensation	₹25m	₹23m	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. TIL sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

TIL Limited's Growth

TIL Limited has reduced its earnings per share by 42% a year over the last three years. Its revenue is down 54% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 TIL Limited Been A Good Investment?

Boasting a total shareholder return of 108% over three years, TIL 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for TIL (2 can't be ignored!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.