L&T Finance Holdings Limited's (NSE:L&TFH) CEO Might Not Expect Shareholders To Be So Generous This Year

Shareholders will probably not be too impressed with the underwhelming results at L&T Finance Holdings Limited (NSE:L&TFH) recently. At the upcoming AGM on 28 July 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for L&T Finance Holdings

Comparing L&T Finance Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that L&T Finance Holdings Limited has a market capitalization of ₹213b, and reported total annual CEO compensation of ₹100m for the year to March 2021. That's a slight decrease of 7.8% on the prior year. Notably, the salary which is ₹78.2m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from ₹149b to ₹478b, the reported median CEO total compensation was ₹99m. This suggests that L&T Finance Holdings remunerates its CEO largely in line with the industry average. Furthermore, Dinanath Dubhashi directly owns ₹20m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹78m	₹94m	78%
Other	₹22m	₹14m	22%
Total Compensation	₹100m	₹108m	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. In L&T Finance Holdings' 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.

L&T Finance Holdings Limited's Growth

Over the last three years, L&T Finance Holdings Limited has shrunk its earnings per share by 19% per year. Its revenue is up 6.0% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. 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 L&T Finance Holdings Limited Been A Good Investment?

With a total shareholder return of -47% over three years, L&T Finance Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for L&T Finance Holdings you should be aware of, and 1 of them shouldn't be ignored.

Switching gears from L&T Finance Holdings, 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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