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
• CEO Mukesh Aggarwal's total compensation includes salary of ₹50.0m
• The total compensation is 1,276% higher than the average for the industry
• Over the past three years, SPL Industries' EPS fell by 7.9% and over the past three years, the total shareholder return was 30%

Despite positive share price growth of 30% for SPL Industries Limited (NSE:SPLIL) over the last few years, earnings growth has been disappointing, which suggests something is amiss. 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. 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. 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

Comparing SPL Industries Limited's CEO Compensation With The Industry

Our data indicates that SPL Industries Limited has a market capitalization of ₹1.8b, and total annual CEO compensation was reported as ₹50m for the year to March 2024. That's a notable increase of 36% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹50m.

For comparison, other companies in the Indian Luxury industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹3.6m. Hence, we can conclude that Mukesh Aggarwal is remunerated higher than the industry median. Furthermore, Mukesh Aggarwal directly owns ₹350m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹50m	₹37m	100%
Other	-	-	-
Total Compensation	₹50m	₹37m	100%

On an industry level, around 98% of total compensation represents salary and 2% is other remuneration. At the company level, SPL Industries pays Mukesh Aggarwal solely through a salary, preferring to go down a conventional route. 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 SPL Industries Limited's Growth Numbers

SPL Industries Limited has reduced its earnings per share by 7.9% a year over the last three years. In the last year, its revenue is down 29%.

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 SPL Industries Limited Been A Good Investment?

With a total shareholder return of 30% over three years, SPL Industries Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

SPL Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for SPL Industries you should be aware of, and 1 of them doesn't sit too well with us.

Important note: SPL Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.