We Think Shareholders Are Less Likely To Approve A Large Pay Rise For IDFC Limited's (NSE:IDFC) CEO For Now

Under the guidance of CEO Sunil Kakar, IDFC Limited (NSE:IDFC) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 22 September 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for IDFC

How Does Total Compensation For Sunil Kakar Compare With Other Companies In The Industry?

Our data indicates that IDFC Limited has a market capitalization of ₹87b, and total annual CEO compensation was reported as ₹53m for the year to March 2021. We note that's an increase of 60% above last year. Notably, the salary which is ₹48.5m, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between ₹29b and ₹118b, we discovered that the median CEO total compensation of that group was ₹29m. Hence, we can conclude that Sunil Kakar is remunerated higher than the industry median. Furthermore, Sunil Kakar directly owns ₹5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹49m	₹28m	92%
Other	₹4.2m	₹5.2m	8%
Total Compensation	₹53m	₹33m	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. Our data reveals that IDFC allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at IDFC Limited's Growth Numbers

Over the last three years, IDFC Limited has shrunk its earnings per share by 27% per year. In the last year, its revenue is up 33%.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has IDFC Limited Been A Good Investment?

With a total shareholder return of 25% over three years, IDFC Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Some shareholders will be pleased by the relatively good results, however, the results could still be improved. Until EPS growth picks back up, we think shareholders may find it hard to justify increasing CEO pay given that they are already paid above industry average.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for IDFC that investors should look into moving forward.

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.
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