We Take A Look At Why LT Foods Limited's (NSE:DAAWAT) CEO Has Earned Their Pay Packet

We have been pretty impressed with the performance at LT Foods Limited (NSE:DAAWAT) recently and CEO Ashwani Arora deserves a mention for their role in it. Coming up to the next AGM on 30 September 2021, shareholders would be keeping this in mind. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

View our latest analysis for LT Foods

Comparing LT Foods Limited's CEO Compensation With the industry

At the time of writing, our data shows that LT Foods Limited has a market capitalization of ₹23b, and reported total annual CEO compensation of ₹21m for the year to March 2021. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is ₹16.1m, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between ₹15b and ₹59b had a median total CEO compensation of ₹28m. So it looks like LT Foods compensates Ashwani Arora in line with the median for the industry. What's more, Ashwani Arora holds ₹1.7b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹16m	₹21m	76%
Other	₹5.0m	-	24%
Total Compensation	₹21m	₹21m	100%

Speaking on an industry level, nearly 100% of total compensation represents salary, while the remainder of 0.38225% is other remuneration. LT Foods sets aside a smaller share of compensation for salary, in comparison to the overall 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.

LT Foods Limited's Growth

LT Foods Limited has seen its earnings per share (EPS) increase by 21% a year over the past three years. It achieved revenue growth of 5.2% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has LT Foods Limited Been A Good Investment?

We think that the total shareholder return of 62%, over three years, would leave most LT Foods Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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 did our research and spotted 2 warning signs for LT Foods that investors should look into moving forward.

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.
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