Most Shareholders Will Probably Find That The CEO Compensation For Welspun India Limited (NSE:WELSPUNIND) Is Reasonable

Key Insights

• Welspun India's Annual General Meeting to take place on 22nd of September
• Total pay for CEO Dipali Goenka includes ₹30.2m salary
• The overall pay is comparable to the industry average
• Welspun India's total shareholder return over the past three years was 105% while its EPS was down 4.9% over the past three years

Welspun India Limited (NSE:WELSPUNIND) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 22nd 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. 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 Welspun India

Comparing Welspun India Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Welspun India Limited has a market capitalization of ₹120b, and reported total annual CEO compensation of ₹40m for the year to March 2023. That's just a smallish increase of 5.8% on last year. In particular, the salary of ₹30.2m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Indian Luxury industry with market caps ranging from ₹83b to ₹266b, we found that the median CEO total compensation was ₹48m. So it looks like Welspun India compensates Dipali Goenka in line with the median for the industry. Furthermore, Dipali Goenka directly owns ₹93m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹30m	₹28m	76%
Other	₹9.5m	₹9.4m	24%
Total Compensation	₹40m	₹38m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. In Welspun India's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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.

Welspun India Limited's Growth

Over the last three years, Welspun India Limited has shrunk its earnings per share by 4.9% per year. In the last year, its revenue is down 8.1%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Welspun India Limited Been A Good Investment?

We think that the total shareholder return of 105%, over three years, would leave most Welspun India Limited shareholders smiling. 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.

To Conclude...

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.

So you may want to check if insiders are buying Welspun India shares with their own money (free access).

Switching gears from Welspun India, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.