Shareholders May Be More Conservative With SPL Industries Limited's (NSE:SPLIL) CEO Compensation For Now

Key Insights

• SPL Industries' Annual General Meeting to take place on 28th of September
• Salary of ₹36.7m is part of CEO Mukesh Aggarwal's total remuneration
• Total compensation is 842% above industry average
• Over the past three years, SPL Industries' EPS fell by 10% and over the past three years, the total shareholder return was 143%

The share price of SPL Industries Limited (NSE:SPLIL) 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 28th of September may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. 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.

Check out our latest analysis for SPL Industries

How Does Total Compensation For Mukesh Aggarwal Compare With Other Companies In The Industry?

According to our data, SPL Industries Limited has a market capitalization of ₹1.9b, and paid its CEO total annual compensation worth ₹37m over the year to March 2023. Notably, that's an increase of 22% over the year before. Notably, the salary of ₹37m is the entirety of the CEO compensation.

On comparing similar-sized companies in the Indian Luxury industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹3.9m. This suggests that Mukesh Aggarwal is paid more than the median for the industry. Moreover, Mukesh Aggarwal also holds ₹381m worth of SPL Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹37m	₹30m	100%
Other	-	₹900	-
Total Compensation	₹37m	₹30m	100%

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. On a company level, SPL Industries prefers to reward its CEO through a salary, opting not to pay Mukesh Aggarwal 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.

SPL Industries Limited's Growth

SPL Industries Limited has reduced its earnings per share by 10% a year over the last three years. It achieved revenue growth of 1.4% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 SPL Industries Limited Been A Good Investment?

We think that the total shareholder return of 143%, over three years, would leave most SPL Industries Limited shareholders smiling. 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.

To Conclude...

SPL Industries pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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. 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. In our study, we found 2 warning signs for SPL Industries you should be aware of, and 1 of them can't be ignored.

Switching gears from SPL Industries, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.