We Think Some Shareholders May Hesitate To Increase Emkay Global Financial Services Limited's (NSE:EMKAY) CEO Compensation

In the past three years, shareholders of Emkay Global Financial Services Limited (NSE:EMKAY) have seen a loss on their investment. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 06 August 2021 will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Emkay Global Financial Services

How Does Total Compensation For Krishna Karwa Compare With Other Companies In The Industry?

At the time of writing, our data shows that Emkay Global Financial Services Limited has a market capitalization of ₹2.9b, and reported total annual CEO compensation of ₹9.4m for the year to March 2021. That's a notable decrease of 18% on last year. We note that the salary portion, which stands at ₹8.40m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹897k. Hence, we can conclude that Krishna Karwa is remunerated higher than the industry median. Furthermore, Krishna Karwa directly owns ₹795m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹8.4m	₹10m	89%
Other	₹1.0m	₹1.2m	11%
Total Compensation	₹9.4m	₹11m	100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. It's interesting to note that Emkay Global Financial Services allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Emkay Global Financial Services Limited's Growth

Over the last three years, Emkay Global Financial Services Limited has shrunk its earnings per share by 27% per year. It achieved revenue growth of 25% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Emkay Global Financial Services Limited Been A Good Investment?

Given the total shareholder loss of 6.2% over three years, many shareholders in Emkay Global Financial Services Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which doesn't sit too well with us) in Emkay Global Financial Services we think you should know about.

Important note: Emkay Global Financial Services is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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