Celebrity Fashions Limited's (NSE:CELEBRITY) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Celebrity Fashions' Annual General Meeting to take place on 18th of September
• Salary of ₹8.40m is part of CEO Vidyuth Rajagopal's total remuneration
• Total compensation is 115% above industry average
• Celebrity Fashions' total shareholder return over the past three years was 262% while its EPS was down 10.0% over the past three years

Celebrity Fashions Limited (NSE:CELEBRITY) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 18th of September. 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.

See our latest analysis for Celebrity Fashions

Comparing Celebrity Fashions Limited's CEO Compensation With The Industry

Our data indicates that Celebrity Fashions Limited has a market capitalization of ₹989m, and total annual CEO compensation was reported as ₹8.4m for the year to March 2023. We note that's an increase of 51% above last year. Notably, the salary of ₹8.4m is the entirety of the CEO compensation.

For comparison, other companies in the Indian Luxury industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹3.9m. Accordingly, our analysis reveals that Celebrity Fashions Limited pays Vidyuth Rajagopal north of the industry median. Furthermore, Vidyuth Rajagopal directly owns ₹586k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹8.4m	₹5.6m	100%
Other	-	-	-
Total Compensation	₹8.4m	₹5.6m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. On a company level, Celebrity Fashions prefers to reward its CEO through a salary, opting not to pay Vidyuth Rajagopal through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Celebrity Fashions Limited's Growth Numbers

Over the last three years, Celebrity Fashions Limited has shrunk its earnings per share by 10.0% per year. In the last year, its revenue is up 10%.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Celebrity Fashions Limited Been A Good Investment?

Boasting a total shareholder return of 262% over three years, Celebrity Fashions Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Celebrity Fashions pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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. That's why we did our research, and identified 5 warning signs for Celebrity Fashions (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.