Why We Think Multi Commodity Exchange of India Limited's (NSE:MCX) CEO Compensation Is Not Excessive At All

Multi Commodity Exchange of India Limited (NSE:MCX) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 27 September 2022 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Multi Commodity Exchange of India

How Does Total Compensation For Subbi Reddy Padala Compare With Other Companies In The Industry?

According to our data, Multi Commodity Exchange of India Limited has a market capitalization of ₹63b, and paid its CEO total annual compensation worth ₹25m over the year to March 2022. This means that the compensation hasn't changed much from last year. In particular, the salary of ₹22.0m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between ₹32b and ₹127b had a median total CEO compensation of ₹32m. This suggests that Multi Commodity Exchange of India remunerates its CEO largely in line with the industry average.

Component	2022	2021	Proportion (2022)
Salary	₹22m	₹22m	87%
Other	₹3.2m	₹3.1m	13%
Total Compensation	₹25m	₹25m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Multi Commodity Exchange of India pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Multi Commodity Exchange of India Limited's Growth Numbers

Multi Commodity Exchange of India Limited has reduced its earnings per share by 7.5% a year over the last three years. Its revenue is down 7.9% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Multi Commodity Exchange of India Limited Been A Good Investment?

We think that the total shareholder return of 37%, over three years, would leave most Multi Commodity Exchange of India Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Multi Commodity Exchange of India that investors should be aware of in a dynamic business environment.

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.