Here's Why Shareholders May Want To Be Cautious With Increasing Maral Overseas Limited's (NSE:MARALOVER) CEO Pay Packet

Key Insights

• Maral Overseas will host its Annual General Meeting on 27th of August
• Total pay for CEO Shekhar Agarwal includes ₹20.3m salary
• The overall pay is 516% above the industry average
• Maral Overseas' EPS declined by 100% over the past three years while total shareholder return over the past three years was 3.2%

Share price growth at Maral Overseas Limited (NSE:MARALOVER) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. The upcoming AGM on 27th of August 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. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Maral Overseas

Comparing Maral Overseas Limited's CEO Compensation With The Industry

According to our data, Maral Overseas Limited has a market capitalization of ₹3.1b, and paid its CEO total annual compensation worth ₹23m over the year to March 2024. We note that's an increase of 11% above last year. We note that the salary portion, which stands at ₹20.3m 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 ₹3.8m. Accordingly, our analysis reveals that Maral Overseas Limited pays Shekhar Agarwal north of the industry median. Moreover, Shekhar Agarwal also holds ₹168m worth of Maral Overseas 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	₹20m	₹18m	86%
Other	₹3.2m	₹2.9m	14%
Total Compensation	₹23m	₹21m	100%

On an industry level, around 99% of total compensation represents salary and 1% is other remuneration. Maral Overseas pays a modest slice of remuneration through salary, as compared to the broader industry. 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 Maral Overseas Limited's Growth Numbers

Maral Overseas Limited has reduced its earnings per share by 100% a year over the last three years. It saw its revenue drop 1.1% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Maral Overseas Limited Been A Good Investment?

With a total shareholder return of 3.2% over three years, Maral Overseas Limited has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Maral Overseas (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the 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.