There Could Be A Chance Sundaram Finance Limited's (NSE:SUNDARMFIN) CEO Will Have Their Compensation Increased

Key Insights

• Sundaram Finance will host its Annual General Meeting on 14th of August
• CEO Rajiv Lochan's total compensation includes salary of ₹23.4m
• The total compensation is 76% less than the average for the industry
• Over the past three years, Sundaram Finance's EPS grew by 7.9% and over the past three years, the total shareholder return was 59%

Shareholders will probably not be disappointed by the robust results at Sundaram Finance Limited (NSE:SUNDARMFIN) recently and they will be keeping this in mind as they go into the AGM on 14th of August. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

Check out our latest analysis for Sundaram Finance

How Does Total Compensation For Rajiv Lochan Compare With Other Companies In The Industry?

According to our data, Sundaram Finance Limited has a market capitalization of ₹427b, and paid its CEO total annual compensation worth ₹54m over the year to March 2024. That's slightly lower by 5.2% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹23m.

For comparison, other companies in the Indian Consumer Finance industry with market capitalizations ranging between ₹336b and ₹1.0t had a median total CEO compensation of ₹222m. This suggests that Rajiv Lochan is paid below the industry median. Moreover, Rajiv Lochan also holds ₹59m worth of Sundaram Finance stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹23m	₹20m	43%
Other	₹30m	₹37m	57%
Total Compensation	₹54m	₹57m	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. Sundaram Finance sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Sundaram Finance Limited's Growth Numbers

Over the past three years, Sundaram Finance Limited has seen its earnings per share (EPS) grow by 7.9% per year. It achieved revenue growth of 25% over the last year.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sundaram Finance Limited Been A Good Investment?

Boasting a total shareholder return of 59% over three years, Sundaram Finance Limited has done well by shareholders. 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.

To Conclude...

The company's overall performance, while not bad, could be better. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

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 3 warning signs (and 1 which doesn't sit too well with us) in Sundaram Finance we think you should know about.

Important note: Sundaram Finance 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com