We Think The Compensation For Tokyo Plast International Limited's (NSE:TOKYOPLAST) CEO Looks About Right

Key Insights

• Tokyo Plast International to hold its Annual General Meeting on 27th of September
• Total pay for CEO Velji Shah includes ₹4.20m salary
• The total compensation is similar to the average for the industry
• Tokyo Plast International's total shareholder return over the past three years was 76% while its EPS was down 28% over the past three years

The share price of Tokyo Plast International Limited (NSE:TOKYOPLAST) 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. Some of these issues will occupy shareholders' minds as the AGM rolls around on 27th of September. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. 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.

See our latest analysis for Tokyo Plast International

Comparing Tokyo Plast International Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Tokyo Plast International Limited has a market capitalization of ₹1.0b, and reported total annual CEO compensation of ₹4.2m for the year to March 2023. There was no change in the compensation compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹4.2m.

For comparison, other companies in the Indian Consumer Durables industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹3.6m. This suggests that Tokyo Plast International remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	₹4.2m	₹4.2m	100%
Other	-	-	-
Total Compensation	₹4.2m	₹4.2m	100%

On an industry level, roughly 100% of total compensation represents salary and 0.2356% is other remuneration. On a company level, Tokyo Plast International prefers to reward its CEO through a salary, opting not to pay Velji Shah through non-salary benefits. 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.

Tokyo Plast International Limited's Growth

Over the last three years, Tokyo Plast International Limited has shrunk its earnings per share by 28% per year. Its revenue is down 11% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. 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 Tokyo Plast International Limited Been A Good Investment?

Boasting a total shareholder return of 76% over three years, Tokyo Plast International Limited has done well by shareholders. 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...

Tokyo Plast International rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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. 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 compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Tokyo Plast International that investors should think about before committing capital to this stock.

Switching gears from Tokyo Plast International, 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.