It's Unlikely That Celebrity Fashions Limited's (NSE:CELEBRITY) CEO Will See A Huge Pay Rise This Year

Key Insights

• Celebrity Fashions to hold its Annual General Meeting on 16th of September
• Total pay for CEO Vidyuth Rajagopal includes ₹11.0m salary
• The total compensation is 206% higher than the average for the industry
• Over the past three years, Celebrity Fashions' EPS fell by 45% and over the past three years, the total shareholder return was 81%

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. The upcoming AGM on 16th of September may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. 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

According to our data, Celebrity Fashions Limited has a market capitalization of ₹923m, and paid its CEO total annual compensation worth ₹11m over the year to March 2024. We note that's an increase of 31% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹11m.

In comparison with other companies in the Indian Luxury industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹3.6m. This suggests that Vidyuth Rajagopal is paid more than the median for the industry. What's more, Vidyuth Rajagopal holds ₹522k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹11m	₹8.4m	100%
Other	-	-	-
Total Compensation	₹11m	₹8.4m	100%

On an industry level, around 98% of total compensation represents salary and 2% is other remuneration. Speaking on a company level, Celebrity Fashions prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Celebrity Fashions Limited's Growth

Over the last three years, Celebrity Fashions Limited has shrunk its earnings per share by 45% per year. It saw its revenue drop 27% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Celebrity Fashions Limited Been A Good Investment?

Boasting a total shareholder return of 81% over three years, Celebrity Fashions Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Celebrity Fashions rewards its CEO solely through a salary, ignoring non-salary benefits completely. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Celebrity Fashions (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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

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.