Shareholders May Be More Conservative With Alphageo (India) Limited's (NSE:ALPHAGEO) CEO Compensation For Now

Despite strong share price growth of 50% for Alphageo (India) Limited (NSE:ALPHAGEO) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24 September 2022. 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. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Alphageo (India)

Comparing Alphageo (India) Limited's CEO Compensation With The Industry

According to our data, Alphageo (India) Limited has a market capitalization of ₹2.0b, and paid its CEO total annual compensation worth ₹23m over the year to March 2022. That's a notable increase of 98% on last year. We note that the salary of ₹12.0m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹16b, we found that the median total CEO compensation was ₹4.8m. Accordingly, our analysis reveals that Alphageo (India) Limited pays Dinesh Alla north of the industry median. Moreover, Dinesh Alla also holds ₹566m worth of Alphageo (India) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹12m	₹3.6m	52%
Other	₹11m	₹8.1m	48%
Total Compensation	₹23m	₹12m	100%

On an industry level, around 100% of total compensation represents salary and 0.1664% is other remuneration. In Alphageo (India)'s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Alphageo (India) Limited's Growth Numbers

Alphageo (India) Limited has reduced its earnings per share by 54% a year over the last three years. It saw its revenue drop 49% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Alphageo (India) Limited Been A Good Investment?

Boasting a total shareholder return of 50% over three years, Alphageo (India) 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...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which shouldn't be ignored) in Alphageo (India) we think you should know about.

Important note: Alphageo (India) 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.