Here's Why Shareholders May Want To Be Cautious With Increasing RPSG Ventures Limited's (NSE:RPSGVENT) CEO Pay Packet

Key Insights

• RPSG Ventures' Annual General Meeting to take place on 21st of August
• Total pay for CEO Rajeev Ramesh Khandelwal includes ₹35.1m salary
• The total compensation is 334% higher than the average for the industry
• RPSG Ventures' EPS declined by 28% over the past three years while total shareholder return over the past three years was 15%

The share price of RPSG Ventures Limited (NSE:RPSGVENT) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 21st of August. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for RPSG Ventures

Comparing RPSG Ventures Limited's CEO Compensation With The Industry

According to our data, RPSG Ventures Limited has a market capitalization of ₹25b, and paid its CEO total annual compensation worth ₹58m over the year to March 2024. Notably, that's a decrease of 46% over the year before. In particular, the salary of ₹35.1m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Indian Professional Services industry with market caps ranging from ₹8.4b to ₹34b, we found that the median CEO total compensation was ₹13m. Hence, we can conclude that Rajeev Ramesh Khandelwal is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹35m	₹36m	61%
Other	₹23m	₹70m	39%
Total Compensation	₹58m	₹107m	100%

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. RPSG Ventures sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at RPSG Ventures Limited's Growth Numbers

RPSG Ventures Limited has reduced its earnings per share by 28% a year over the last three years. Its revenue is up 8.8% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has RPSG Ventures Limited Been A Good Investment?

RPSG Ventures Limited has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for RPSG Ventures you should be aware of, and 1 of them is concerning.

Important note: RPSG Ventures 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.