Shareholders May Not Be So Generous With Globus Spirits Limited's (NSE:GLOBUSSPR) CEO Compensation And Here's Why

Key Insights

• Globus Spirits will host its Annual General Meeting on 29th of August
• CEO Ajay Swarup's total compensation includes salary of ₹34.1m
• The total compensation is 113% higher than the average for the industry
• Globus Spirits' EPS declined by 26% over the past three years while total shareholder return over the past three years was 3.2%

The anaemic share price growth at Globus Spirits Limited (NSE:GLOBUSSPR) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. The upcoming AGM on 29th of August may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. 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 Globus Spirits

Comparing Globus Spirits Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Globus Spirits Limited has a market capitalization of ₹26b, and reported total annual CEO compensation of ₹54m for the year to March 2024. That's a fairly small increase of 5.7% over the previous year. Notably, the salary which is ₹34.1m, represents most of the total compensation being paid.

For comparison, other companies in the Indian Beverage industry with market capitalizations ranging between ₹17b and ₹67b had a median total CEO compensation of ₹26m. This suggests that Ajay Swarup is paid more than the median for the industry. What's more, Ajay Swarup holds ₹21m 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	₹34m	₹25m	63%
Other	₹20m	₹26m	37%
Total Compensation	₹54m	₹51m	100%

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. In Globus Spirits' 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.

Globus Spirits Limited's Growth

Globus Spirits Limited has reduced its earnings per share by 26% a year over the last three years. Its revenue is up 14% over the last year.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Globus Spirits Limited Been A Good Investment?

With a total shareholder return of 3.2% over three years, Globus Spirits Limited has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

The flat share price growth combined with the the fact that earnings have failed to grow makes us wonder whether the share price will have any further strong momentum. 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. That's why we did some digging and identified 3 warning signs for Globus Spirits that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.