We Think Some Shareholders May Hesitate To Increase V-Guard Industries Limited's (NSE:VGUARD) CEO Compensation

Performance at V-Guard Industries Limited (NSE:VGUARD) has been reasonably good and CEO Mithun Chittilappilly has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 05 August 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for V-Guard Industries

How Does Total Compensation For Mithun Chittilappilly Compare With Other Companies In The Industry?

According to our data, V-Guard Industries Limited has a market capitalization of ₹107b, and paid its CEO total annual compensation worth ₹52m over the year to March 2021. That's a notable increase of 9.1% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹14m.

On comparing similar companies from the same industry with market caps ranging from ₹75b to ₹238b, we found that the median CEO total compensation was ₹22m. Accordingly, our analysis reveals that V-Guard Industries Limited pays Mithun Chittilappilly north of the industry median. What's more, Mithun Chittilappilly holds ₹27b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹14m	₹14m	27%
Other	₹38m	₹34m	73%
Total Compensation	₹52m	₹48m	100%

On an industry level, around 95% of total compensation represents salary and 5% is other remuneration. It's interesting to note that V-Guard Industries allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at V-Guard Industries Limited's Growth Numbers

V-Guard Industries Limited's earnings per share (EPS) grew 14% per year over the last three years. It achieved revenue growth of 8.6% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 V-Guard Industries Limited Been A Good Investment?

V-Guard Industries Limited has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for V-Guard Industries that investors should look into moving forward.

Important note: V-Guard Industries 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.

When trading V-Guard Industries or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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