Most Shareholders Will Probably Agree With Filatex India Limited's (NSE:FILATEX) CEO Compensation

Key Insights

• Filatex India to hold its Annual General Meeting on 27th of September
• Salary of ₹11.2m is part of CEO Madhu Bhageria's total remuneration
• The overall pay is comparable to the industry average
• Filatex India's EPS declined by 20% over the past three years while total shareholder return over the past three years was 22%

Despite positive share price growth of 22% for Filatex India Limited (NSE:FILATEX) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 27th of September. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Filatex India

How Does Total Compensation For Madhu Bhageria Compare With Other Companies In The Industry?

Our data indicates that Filatex India Limited has a market capitalization of ₹28b, and total annual CEO compensation was reported as ₹18m for the year to March 2024. Notably, that's an increase of 17% over the year before. In particular, the salary of ₹11.2m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Indian Luxury industry with market capitalizations ranging from ₹17b to ₹67b, the reported median CEO total compensation was ₹24m. From this we gather that Madhu Bhageria is paid around the median for CEOs in the industry. Moreover, Madhu Bhageria also holds ₹3.1b worth of Filatex India stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹11m	₹8.6m	63%
Other	₹6.6m	₹6.7m	37%
Total Compensation	₹18m	₹15m	100%

Talking in terms of the industry, salary represented approximately 98% of total compensation out of all the companies we analyzed, while other remuneration made up 2% of the pie. In Filatex India's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.

Filatex India Limited's Growth

Over the last three years, Filatex India Limited has shrunk its earnings per share by 20% per year. Its revenue is down 1.8% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Filatex India Limited Been A Good Investment?

Filatex India Limited has served shareholders reasonably well, with a total return of 22% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

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.

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 identified 2 warning signs for Filatex India (1 is concerning!) that you should be aware of before investing here.

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.

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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.