Should Shareholders Worry About IFB Industries Limited's (NSE:IFBIND) CEO Compensation Package?

Performance at IFB Industries Limited (NSE:IFBIND) has not been particularly rosy recently and shareholders will likely be holding CEO Bikram Nag and the board accountable for this. The next AGM coming up on 06 August 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

Check out our latest analysis for IFB Industries

How Does Total Compensation For Bikram Nag Compare With Other Companies In The Industry?

According to our data, IFB Industries Limited has a market capitalization of ₹41b, and paid its CEO total annual compensation worth ₹8.8m over the year to March 2021. We note that's a small decrease of 6.2% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹8.8m.

On examining similar-sized companies in the industry with market capitalizations between ₹15b and ₹59b, we discovered that the median CEO total compensation of that group was ₹31m. That is to say, Bikram Nag is paid under the industry median. Moreover, Bikram Nag also holds ₹3.0m worth of IFB Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	₹8.8m	₹9.4m	100%
Other	-	-	-
Total Compensation	₹8.8m	₹9.4m	100%

Speaking on an industry level, nearly 97% of total compensation represents salary, while the remainder of 3% is other remuneration. At the company level, IFB Industries pays Bikram Nag solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at IFB Industries Limited's Growth Numbers

Over the last three years, IFB Industries Limited has shrunk its earnings per share by 7.9% per year. Its revenue is up 6.2% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 IFB Industries Limited Been A Good Investment?

Given the total shareholder loss of 15% over three years, many shareholders in IFB Industries Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

IFB Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for IFB Industries that investors should think about before committing capital to this 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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