Shareholders Will Probably Hold Off On Increasing Avanti Feeds Limited's (NSE:AVANTIFEED) CEO Compensation For The Time Being

Key Insights

• Avanti Feeds will host its Annual General Meeting on 6th of August
• CEO Alluri Kumar's total compensation includes salary of ₹47.3m
• The total compensation is 1,320% higher than the average for the industry
• Avanti Feeds' EPS declined by 0.3% over the past three years while total shareholder return over the past three years was 13%

The share price of Avanti Feeds Limited (NSE:AVANTIFEED) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 6th of August. 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.

See our latest analysis for Avanti Feeds

Comparing Avanti Feeds Limited's CEO Compensation With The Industry

Our data indicates that Avanti Feeds Limited has a market capitalization of ₹94b, and total annual CEO compensation was reported as ₹300m for the year to March 2024. Notably, that's an increase of 24% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹47m.

For comparison, other companies in the Indian Food industry with market capitalizations ranging between ₹33b and ₹134b had a median total CEO compensation of ₹21m. This suggests that Alluri Kumar is paid more than the median for the industry. What's more, Alluri Kumar holds ₹11b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹47m	₹43m	16%
Other	₹253m	₹199m	84%
Total Compensation	₹300m	₹242m	100%

On an industry level, around 99% of total compensation represents salary and 0.62953572% is other remuneration. It's interesting to note that Avanti Feeds allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Avanti Feeds Limited's Growth Numbers

Over the last three years, Avanti Feeds Limited has not seen its earnings per share change much, though they have deteriorated slightly. It achieved revenue growth of 5.5% over the last year.

The lack of EPS growth is certainly uninspiring. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Avanti Feeds Limited Been A Good Investment?

Avanti Feeds Limited has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. 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 compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Avanti Feeds that investors should be aware of in a dynamic business environment.

Switching gears from Avanti Feeds, 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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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