The Compensation For Titagarh Rail Systems Limited's (NSE:TITAGARH) CEO Looks Deserved And Here's Why

Key Insights

• Titagarh Rail Systems to hold its Annual General Meeting on 27th of August
• Salary of ₹36.3m is part of CEO Umesh Chowdhary's total remuneration
• The overall pay is comparable to the industry average
• Titagarh Rail Systems' EPS grew by 125% over the past three years while total shareholder return over the past three years was 1,460%

We have been pretty impressed with the performance at Titagarh Rail Systems Limited (NSE:TITAGARH) recently and CEO Umesh Chowdhary deserves a mention for their role in it. Coming up to the next AGM on 27th of August, 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. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for Titagarh Rail Systems

How Does Total Compensation For Umesh Chowdhary Compare With Other Companies In The Industry?

Our data indicates that Titagarh Rail Systems Limited has a market capitalization of ₹199b, and total annual CEO compensation was reported as ₹36m for the year to March 2024. That's a notable increase of 41% on last year. Notably, the salary of ₹36m is the entirety of the CEO compensation.

On comparing similar companies from the Indian Machinery industry with market caps ranging from ₹84b to ₹268b, we found that the median CEO total compensation was ₹38m. This suggests that Titagarh Rail Systems remunerates its CEO largely in line with the industry average. What's more, Umesh Chowdhary holds ₹112m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹36m	₹26m	100%
Other	-	-	-
Total Compensation	₹36m	₹26m	100%

Speaking on an industry level, nearly 91% of total compensation represents salary, while the remainder of 9% is other remuneration. On a company level, Titagarh Rail Systems prefers to reward its CEO through a salary, opting not to pay Umesh Chowdhary through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Titagarh Rail Systems Limited's Growth

Titagarh Rail Systems Limited's earnings per share (EPS) grew 125% per year over the last three years. In the last year, its revenue is up 18%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Titagarh Rail Systems Limited Been A Good Investment?

Boasting a total shareholder return of 1,460% over three years, Titagarh Rail Systems 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.

To Conclude...

Titagarh Rail Systems rewards its CEO solely through a salary, ignoring non-salary benefits completely. Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is a bit unpleasant) in Titagarh Rail Systems we think you should know about.

Important note: Titagarh Rail Systems 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.