Increases to CEO Compensation Might Be Put On Hold For Now at Lambodhara Textiles Limited (NSE:LAMBODHARA)

Key Insights

• Lambodhara Textiles to hold its Annual General Meeting on 16th of September
• Salary of ₹6.00m is part of CEO Bosco Giulia's total remuneration
• The overall pay is 85% above the industry average
• Over the past three years, Lambodhara Textiles' EPS fell by 32% and over the past three years, the total shareholder return was 124%

The share price of Lambodhara Textiles Limited (NSE:LAMBODHARA) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. 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. 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Lambodhara Textiles

How Does Total Compensation For Bosco Giulia Compare With Other Companies In The Industry?

Our data indicates that Lambodhara Textiles Limited has a market capitalization of ₹1.9b, and total annual CEO compensation was reported as ₹6.6m for the year to March 2024. Notably, that's an increase of 66% over the year before. We note that the salary portion, which stands at ₹6.00m constitutes the majority of total compensation received by the CEO.

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. Accordingly, our analysis reveals that Lambodhara Textiles Limited pays Bosco Giulia north of the industry median. Moreover, Bosco Giulia also holds ₹683m worth of Lambodhara Textiles 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	₹6.0m	₹3.6m	90%
Other	₹647k	₹407k	10%
Total Compensation	₹6.6m	₹4.0m	100%

On an industry level, roughly 98% of total compensation represents salary and 2% is other remuneration. Our data reveals that Lambodhara Textiles allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Lambodhara Textiles Limited's Growth

Lambodhara Textiles Limited has reduced its earnings per share by 32% a year over the last three years. It saw its revenue drop 2.6% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. 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 Lambodhara Textiles Limited Been A Good Investment?

We think that the total shareholder return of 124%, over three years, would leave most Lambodhara Textiles Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

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 Lambodhara Textiles that investors should think about before committing capital to this 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.

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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.