Here's Why The Indian Hotels Company Limited's (NSE:INDHOTEL) CEO Is Unlikely to Expect A Pay Rise This Year

The anaemic share price growth at The Indian Hotels Company Limited (NSE:INDHOTEL) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. The upcoming AGM on 22 June 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Indian Hotels

Comparing The Indian Hotels Company Limited's CEO Compensation With the industry

Our data indicates that The Indian Hotels Company Limited has a market capitalization of ₹162b, and total annual CEO compensation was reported as ₹72m for the year to March 2021. That's a notable decrease of 50% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹16m.

In comparison with other companies in the industry with market capitalizations ranging from ₹73b to ₹234b, the reported median CEO total compensation was ₹72m. From this we gather that Puneet Chhatwal is paid around the median for CEOs in the industry.

Component	2021	2020	Proportion (2021)
Salary	₹16m	₹16m	22%
Other	₹56m	₹129m	78%
Total Compensation	₹72m	₹146m	100%

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. Indian Hotels pays a modest slice of remuneration through salary, as compared 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 The Indian Hotels Company Limited's Growth Numbers

The Indian Hotels Company Limited has reduced its earnings per share by 76% a year over the last three years. It saw its revenue drop 63% over the last year.

The decline in EPS is a bit concerning. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The Indian Hotels Company Limited Been A Good Investment?

The Indian Hotels Company Limited has generated a total shareholder return of 3.9% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. 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.

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. We did our research and spotted 1 warning sign for Indian Hotels that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. 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.
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