Welspun India Limited's (NSE:WELSPUNIND) CEO Will Probably Have Their Compensation Approved By Shareholders

By
Simply Wall St
Published
August 24, 2021
NSEI:WELSPUNIND
Source: Shutterstock

We have been pretty impressed with the performance at Welspun India Limited (NSE:WELSPUNIND) recently and CEO Dipali Goenka deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 31 August 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out 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 ₹126b, and reported total annual CEO compensation of ₹30m for the year to March 2021. This was the same amount the CEO received in the prior year. We note that the salary portion, which stands at ₹22.5m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from ₹74b to ₹237b, the reported median CEO total compensation was ₹30m. This suggests that Welspun India remunerates its CEO largely in line with the industry average. Furthermore, Dipali Goenka directly owns ₹96m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary ₹23m ₹25m 75%
Other ₹7.5m ₹5.0m 25%
Total Compensation₹30m ₹30m100%

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 dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
NSEI:WELSPUNIND CEO Compensation August 25th 2021

Welspun India Limited's Growth

Over the past three years, Welspun India Limited has seen its earnings per share (EPS) grow by 22% per year. In the last year, its revenue is up 34%.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Welspun India Limited Been A Good Investment?

We think that the total shareholder return of 95%, over three years, would leave most Welspun India Limited shareholders smiling. 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...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Welspun India that investors should think about before committing capital to this stock.

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.

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