Increases to CEO Compensation Might Be Put On Hold For Now at Kitex Garments Limited (NSE:KITEX)

Key Insights

• Kitex Garments to hold its Annual General Meeting on 28th of September
• Salary of ₹10.8m is part of CEO Sabu Jacob's total remuneration
• Total compensation is 107% above industry average
• Kitex Garments' total shareholder return over the past three years was 192% while its EPS grew by 6.9% over the past three years

Performance at Kitex Garments Limited (NSE:KITEX) has been reasonably good and CEO Sabu Jacob has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 28th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Kitex Garments

Comparing Kitex Garments Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Kitex Garments Limited has a market capitalization of ₹32b, and reported total annual CEO compensation of ₹50m for the year to March 2024. Notably, that's a decrease of 46% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹11m.

On comparing similar companies from the Indian Luxury industry with market caps ranging from ₹17b to ₹67b, we found that the median CEO total compensation was ₹24m. Accordingly, our analysis reveals that Kitex Garments Limited pays Sabu Jacob north of the industry median. What's more, Sabu Jacob holds ₹13b 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	₹11m	22%
Other	₹39m	₹82m	78%
Total Compensation	₹50m	₹93m	100%

Speaking on an industry level, nearly 98% of total compensation represents salary, while the remainder of 2% is other remuneration. It's interesting to note that Kitex Garments allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Kitex Garments Limited's Growth Numbers

Kitex Garments Limited's earnings per share (EPS) grew 6.9% per year over the last three years. Its revenue is up 46% over the last year.

It's hard to interpret the strong revenue growth as anything other than a positive. And in that context, the modest EPS improvement certainly isn't shabby. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! 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 Kitex Garments Limited Been A Good Investment?

Most shareholders would probably be pleased with Kitex Garments Limited for providing a total return of 192% over three years. 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.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Kitex Garments (3 don't sit too well with us!) that you should be aware of before investing here.

Important note: Kitex Garments is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.