It's Unlikely That Monte Carlo Fashions Limited's (NSE:MONTECARLO) CEO Will See A Huge Pay Rise This Year

Key Insights

• Monte Carlo Fashions to hold its Annual General Meeting on 23rd of September
• Salary of ₹33.6m is part of CEO Jawahar Oswal's total remuneration
• Total compensation is 188% above industry average
• Monte Carlo Fashions' total shareholder return over the past three years was 163% while its EPS was down 5.8% over the past three years

The share price of Monte Carlo Fashions Limited (NSE:MONTECARLO) 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 23rd of September may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Monte Carlo Fashions

Comparing Monte Carlo Fashions Limited's CEO Compensation With The Industry

Our data indicates that Monte Carlo Fashions Limited has a market capitalization of ₹17b, and total annual CEO compensation was reported as ₹67m for the year to March 2024. That is, the compensation was roughly the same as last year. In particular, the salary of ₹33.6m, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the Indian Luxury industry with market capitalizations ranging from ₹8.4b to ₹34b, the reported median CEO total compensation was ₹23m. Hence, we can conclude that Jawahar Oswal is remunerated higher than the industry median. Moreover, Jawahar Oswal also holds ₹86m worth of Monte Carlo Fashions 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	₹34m	₹34m	50%
Other	₹33m	₹34m	50%
Total Compensation	₹67m	₹68m	100%

On an industry level, around 99% of total compensation represents salary and 1% is other remuneration. Monte Carlo Fashions pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Monte Carlo Fashions Limited's Growth

Monte Carlo Fashions Limited has reduced its earnings per share by 5.8% a year over the last three years. In the last year, its revenue is down 8.3%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Monte Carlo Fashions Limited Been A Good Investment?

Most shareholders would probably be pleased with Monte Carlo Fashions Limited for providing a total return of 163% 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...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Monte Carlo Fashions 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.