Here's Why It's Unlikely That Stove Kraft Limited's (NSE:STOVEKRAFT) CEO Will See A Pay Rise This Year

Key Insights

• Stove Kraft to hold its Annual General Meeting on 20th of September
• Total pay for CEO Rajendra Gandhi includes ₹13.5m salary
• Total compensation is similar to the industry average
• Stove Kraft's three-year loss to shareholders was 7.9% while its EPS was down 25% over the past three years

The results at Stove Kraft Limited (NSE:STOVEKRAFT) have been quite disappointing recently and CEO Rajendra Gandhi bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 20th 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. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Stove Kraft

Comparing Stove Kraft Limited's CEO Compensation With The Industry

Our data indicates that Stove Kraft Limited has a market capitalization of ₹29b, and total annual CEO compensation was reported as ₹14m for the year to March 2024. That is, the compensation was roughly the same as last year. Notably, the salary of ₹14m is the entirety of the CEO compensation.

For comparison, other companies in the Indian Consumer Durables industry with market capitalizations ranging between ₹17b and ₹67b had a median total CEO compensation of ₹19m. From this we gather that Rajendra Gandhi is paid around the median for CEOs in the industry. Furthermore, Rajendra Gandhi directly owns ₹16b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹14m	₹14m	100%
Other	-	-	-
Total Compensation	₹14m	₹14m	100%

On an industry level, around 94% of total compensation represents salary and 6% is other remuneration. At the company level, Stove Kraft pays Rajendra Gandhi 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 Stove Kraft Limited's Growth Numbers

Stove Kraft Limited has reduced its earnings per share by 25% a year over the last three years. Its revenue is up 5.7% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Stove Kraft Limited Been A Good Investment?

Since shareholders would have lost about 7.9% over three years, some Stove Kraft Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Stove Kraft pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Stove Kraft you should be aware of, and 1 of them shouldn't be ignored.

Important note: Stove Kraft 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.