Increases to CEO Compensation Might Be Put On Hold For Now at Nandani Creation Limited (NSE:JAIPURKURT)

Key Insights

• Nandani Creation will host its Annual General Meeting on 30th of September
• Total pay for CEO Anuj Mundhra includes ₹5.04m salary
• The total compensation is 39% higher than the average for the industry
• Nandani Creation's three-year loss to shareholders was 20% while its EPS was down 12% over the past three years

Shareholders of Nandani Creation Limited (NSE:JAIPURKURT) will have been dismayed by the negative share price return over the last three years. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 30th of September, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Nandani Creation

How Does Total Compensation For Anuj Mundhra Compare With Other Companies In The Industry?

At the time of writing, our data shows that Nandani Creation Limited has a market capitalization of ₹476m, and reported total annual CEO compensation of ₹5.0m for the year to March 2024. We note that's an increase of 56% above last year. Notably, the salary of ₹5.0m is the entirety of the CEO compensation.

On comparing similar-sized companies in the Indian Luxury industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹3.6m. Hence, we can conclude that Anuj Mundhra is remunerated higher than the industry median. Moreover, Anuj Mundhra also holds ₹135m worth of Nandani Creation 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	₹5.0m	₹3.2m	100%
Other	-	-	-
Total Compensation	₹5.0m	₹3.2m	100%

Talking in terms of the industry, salary represented approximately 99% of total compensation out of all the companies we analyzed, while other remuneration made up 1% of the pie. On a company level, Nandani Creation prefers to reward its CEO through a salary, opting not to pay Anuj Mundhra through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Nandani Creation Limited's Growth

Over the last three years, Nandani Creation Limited has shrunk its earnings per share by 12% per year. In the last year, its revenue is up 33%.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Nandani Creation Limited Been A Good Investment?

Since shareholders would have lost about 20% over three years, some Nandani Creation Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Nandani Creation rewards its CEO solely through a salary, ignoring non-salary benefits completely. The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

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 4 warning signs for Nandani Creation 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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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.