Here's Why Shareholders May Want To Be Cautious With Increasing Vascon Engineers Limited's (NSE:VASCONEQ) CEO Pay Packet

Key Insights

• Vascon Engineers' Annual General Meeting to take place on 26th of September
• CEO Santosh Sundararajan's total compensation includes salary of ₹27.3m
• The total compensation is 91% higher than the average for the industry
• Vascon Engineers' total shareholder return over the past three years was 574% while its EPS grew by 105% over the past three years

CEO Santosh Sundararajan has done a decent job of delivering relatively good performance at Vascon Engineers Limited (NSE:VASCONEQ) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 26th of September. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Vascon Engineers

How Does Total Compensation For Santosh Sundararajan Compare With Other Companies In The Industry?

Our data indicates that Vascon Engineers Limited has a market capitalization of ₹13b, and total annual CEO compensation was reported as ₹43m for the year to March 2023. Notably, that's a decrease of 32% over the year before. Notably, the salary which is ₹27.3m, represents most of the total compensation being paid.

On examining similar-sized companies in the Indian Construction industry with market capitalizations between ₹8.3b and ₹33b, we discovered that the median CEO total compensation of that group was ₹23m. Accordingly, our analysis reveals that Vascon Engineers Limited pays Santosh Sundararajan north of the industry median. Furthermore, Santosh Sundararajan directly owns ₹496m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹27m	₹27m	63%
Other	₹16m	₹37m	37%
Total Compensation	₹43m	₹64m	100%

Speaking on an industry level, nearly 98% of total compensation represents salary, while the remainder of 2% is other remuneration. Vascon Engineers pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Vascon Engineers Limited's Growth

Vascon Engineers Limited's earnings per share (EPS) grew 105% per year over the last three years. It achieved revenue growth of 35% over the last year.

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 Vascon Engineers Limited Been A Good Investment?

Most shareholders would probably be pleased with Vascon Engineers Limited for providing a total return of 574% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for Vascon Engineers that investors should look into moving forward.

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.