We Think Some Shareholders May Hesitate To Increase Avanti Feeds Limited's (NSE:AVANTIFEED) CEO Compensation

By
Simply Wall St
Published
August 07, 2021
NSEI:AVANTIFEED
Source: Shutterstock

The share price of Avanti Feeds Limited (NSE:AVANTIFEED) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 14 August 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Avanti Feeds

How Does Total Compensation For C. Rao Compare With Other Companies In The Industry?

Our data indicates that Avanti Feeds Limited has a market capitalization of ₹85b, and total annual CEO compensation was reported as ₹138m for the year to March 2021. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹18m.

In comparison with other companies in the industry with market capitalizations ranging from ₹30b to ₹119b, the reported median CEO total compensation was ₹32m. Hence, we can conclude that C. Rao is remunerated higher than the industry median. Furthermore, C. Rao directly owns ₹1.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary ₹18m ₹17m 13%
Other ₹120m ₹120m 87%
Total Compensation₹138m ₹137m100%

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. 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.

ceo-compensation
NSEI:AVANTIFEED CEO Compensation August 8th 2021

Avanti Feeds Limited's Growth

Over the last three years, Avanti Feeds Limited has shrunk its earnings per share by 6.9% per year. In the last year, its revenue changed by just 0.4%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Avanti Feeds Limited Been A Good Investment?

We think that the total shareholder return of 42%, over three years, would leave most Avanti Feeds Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

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. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Avanti Feeds 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.

If you decide to trade Avanti Feeds, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.