Should Shareholders Reconsider The Bombay Burmah Trading Corporation, Limited's (NSE:BBTC) CEO Compensation Package?

Key Insights

• Bombay Burmah Trading Corporation to hold its Annual General Meeting on 29th of September
• CEO Ness Wadia's total compensation includes salary of ₹49.3m
• Total compensation is 84% above industry average
• Bombay Burmah Trading Corporation's EPS declined by 127% over the past three years while total shareholder loss over the past three years was 7.2%

The Bombay Burmah Trading Corporation, Limited (NSE:BBTC) has not performed well recently and CEO Ness Wadia will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29th of September. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Bombay Burmah Trading Corporation

How Does Total Compensation For Ness Wadia Compare With Other Companies In The Industry?

At the time of writing, our data shows that The Bombay Burmah Trading Corporation, Limited has a market capitalization of ₹84b, and reported total annual CEO compensation of ₹60m for the year to March 2023. Notably, that's an increase of 46% over the year before. In particular, the salary of ₹49.3m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Indian Food industry with market caps ranging from ₹33b to ₹133b, we found that the median CEO total compensation was ₹33m. This suggests that Ness Wadia is paid more than the median for the industry. Furthermore, Ness Wadia directly owns ₹26m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹49m	₹34m	82%
Other	₹11m	₹7.8m	18%
Total Compensation	₹60m	₹41m	100%

Talking in terms of the industry, salary represented approximately 95% of total compensation out of all the companies we analyzed, while other remuneration made up 5% of the pie. In Bombay Burmah Trading Corporation's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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 The Bombay Burmah Trading Corporation, Limited's Growth Numbers

Over the last three years, The Bombay Burmah Trading Corporation, Limited has shrunk its earnings per share by 127% per year. Its revenue is up 15% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet 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 The Bombay Burmah Trading Corporation, Limited Been A Good Investment?

With a three year total loss of 7.2% for the shareholders, The Bombay Burmah Trading Corporation, Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in 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. That's why we did some digging and identified 1 warning sign for Bombay Burmah Trading Corporation that investors should think about before committing capital to this stock.

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.