It's Unlikely That Vardhman Textiles Limited's (NSE:VTL) CEO Will See A Huge Pay Rise This Year

Key Insights

• Vardhman Textiles to hold its Annual General Meeting on 19th of September
• CEO Shri Oswal's total compensation includes salary of ₹10.9m
• The total compensation is 401% higher than the average for the industry
• Vardhman Textiles' total shareholder return over the past three years was 38% while its EPS was down 3.1% over the past three years

Despite strong share price growth of 38% for Vardhman Textiles Limited (NSE:VTL) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 19th 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 what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Vardhman Textiles

Comparing Vardhman Textiles Limited's CEO Compensation With The Industry

Our data indicates that Vardhman Textiles Limited has a market capitalization of ₹144b, and total annual CEO compensation was reported as ₹174m for the year to March 2024. That's a notable decrease of 16% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹11m.

For comparison, other companies in the Indian Luxury industry with market capitalizations ranging between ₹84b and ₹269b had a median total CEO compensation of ₹35m. Hence, we can conclude that Shri Oswal is remunerated higher than the industry median. Furthermore, Shri Oswal directly owns ₹1.5b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹11m	₹8.5m	6%
Other	₹163m	₹198m	94%
Total Compensation	₹174m	₹206m	100%

On an industry level, roughly 99% of total compensation represents salary and 1% is other remuneration. In Vardhman Textiles' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Vardhman Textiles Limited's Growth Numbers

Over the last three years, Vardhman Textiles Limited has shrunk its earnings per share by 3.1% per year. Its revenue is down 1.5% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Vardhman Textiles Limited Been A Good Investment?

Boasting a total shareholder return of 38% over three years, Vardhman Textiles Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

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. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Vardhman Textiles that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.