Shareholders May Be Wary Of Increasing Lux Industries Limited's (NSE:LUXIND) CEO Compensation Package

Key Insights

• Lux Industries will host its Annual General Meeting on 26th of September
• Salary of ₹45.0m is part of CEO Pradip Todi's total remuneration
• The total compensation is 51% higher than the average for the industry
• Lux Industries' EPS declined by 21% over the past three years while total shareholder loss over the past three years was 41%

The results at Lux Industries Limited (NSE:LUXIND) have been quite disappointing recently and CEO Pradip Todi bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 26th of September. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Lux Industries

Comparing Lux Industries Limited's CEO Compensation With The Industry

According to our data, Lux Industries Limited has a market capitalization of ₹65b, and paid its CEO total annual compensation worth ₹45m over the year to March 2024. There was no change in the compensation compared to last year. Notably, the salary of ₹45m is the entirety of the CEO compensation.

For comparison, other companies in the Indian Luxury industry with market capitalizations ranging between ₹33b and ₹134b had a median total CEO compensation of ₹30m. Accordingly, our analysis reveals that Lux Industries Limited pays Pradip Todi north of the industry median. What's more, Pradip Todi holds ₹15b 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	₹45m	₹45m	100%
Other	-	-	-
Total Compensation	₹45m	₹45m	100%

Speaking on an industry level, nearly 99% of total compensation represents salary, while the remainder of 1% is other remuneration. On a company level, Lux Industries prefers to reward its CEO through a salary, opting not to pay Pradip Todi 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.

Lux Industries Limited's Growth

Lux Industries Limited has reduced its earnings per share by 21% a year over the last three years. In the last year, its revenue changed by just 0.3%.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Lux Industries Limited Been A Good Investment?

With a total shareholder return of -41% over three years, Lux Industries Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Lux Industries pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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.

Shareholders may want to check for free if Lux Industries insiders are buying or selling shares.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.