Here's Why It's Unlikely That Arvind Limited's (NSE:ARVIND) CEO Will See A Pay Rise This Year

Shareholders will probably not be too impressed with the underwhelming results at Arvind Limited (NSE:ARVIND) recently. At the upcoming AGM on 18 August 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Arvind

How Does Total Compensation For Sanjaybhai Lalbhai Compare With Other Companies In The Industry?

According to our data, Arvind Limited has a market capitalization of ₹25b, and paid its CEO total annual compensation worth ₹15m over the year to March 2021. We note that's a decrease of 64% compared to last year. In particular, the salary of ₹7.81m, makes up a fairly large portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between ₹15b and ₹60b, we discovered that the median CEO total compensation of that group was ₹14m. This suggests that Arvind remunerates its CEO largely in line with the industry average.

Component	2021	2020	Proportion (2021)
Salary	₹7.8m	₹10m	53%
Other	₹6.9m	₹31m	47%
Total Compensation	₹15m	₹41m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Arvind pays a modest slice of remuneration through salary, as compared to the broader 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 Arvind Limited's Growth Numbers

Over the last three years, Arvind Limited has shrunk its earnings per share by 39% per year. It saw its revenue drop 2.6% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Arvind Limited Been A Good Investment?

With a total shareholder return of -75% over three years, Arvind Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in Arvind we think you should know about.

Switching gears from Arvind, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

If you’re looking to trade Arvind, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*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.