We Think Some Shareholders May Hesitate To Increase Superhouse Limited's (NSE:SUPERHOUSE) CEO Compensation

Key Insights

• Superhouse to hold its Annual General Meeting on 30th of September
• Total pay for CEO Mukhtarul Amin includes ₹12.0m salary
• The overall pay is 270% above the industry average
• Superhouse's total shareholder return over the past three years was 38% while its EPS was down 23% over the past three years

Despite strong share price growth of 38% for Superhouse Limited (NSE:SUPERHOUSE) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 30th of September. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Superhouse

Comparing Superhouse Limited's CEO Compensation With The Industry

According to our data, Superhouse Limited has a market capitalization of ₹2.5b, and paid its CEO total annual compensation worth ₹13m over the year to March 2024. Notably, that's a decrease of 8.5% over the year before. Notably, the salary which is ₹12.0m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Indian Luxury industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹3.6m. Hence, we can conclude that Mukhtarul Amin is remunerated higher than the industry median. What's more, Mukhtarul Amin holds ₹306m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹12m	₹12m	89%
Other	₹1.5m	₹2.7m	11%
Total Compensation	₹13m	₹15m	100%

On an industry level, roughly 99% of total compensation represents salary and 1% is other remuneration. Superhouse is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Superhouse Limited's Growth Numbers

Over the last three years, Superhouse Limited has shrunk its earnings per share by 23% per year. Its revenue is down 15% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Superhouse Limited Been A Good Investment?

Most shareholders would probably be pleased with Superhouse Limited for providing a total return of 38% 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.

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. We did our research and identified 4 warning signs (and 1 which doesn't sit too well with us) in Superhouse we think you should know about.

Switching gears from Superhouse, 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.