Why We Think The CEO Of Hindustan Foods Limited (NSE:HNDFDS) May Soon See A Pay Rise

Key Insights

• Hindustan Foods will host its Annual General Meeting on 15th of September
• CEO Sameer Kothari's total compensation includes salary of ₹16.0m
• Total compensation is 45% below industry average
• Hindustan Foods' total shareholder return over the past three years was 201% while its EPS grew by 48% over the past three years

Shareholders will be pleased by the impressive results for Hindustan Foods Limited (NSE:HNDFDS) recently and CEO Sameer Kothari has played a key role. At the upcoming AGM on 15th of September, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for Hindustan Foods

How Does Total Compensation For Sameer Kothari Compare With Other Companies In The Industry?

At the time of writing, our data shows that Hindustan Foods Limited has a market capitalization of ₹61b, and reported total annual CEO compensation of ₹16m for the year to March 2023. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹16m.

In comparison with other companies in the Indian Food industry with market capitalizations ranging from ₹33b to ₹133b, the reported median CEO total compensation was ₹29m. This suggests that Sameer Kothari is paid below the industry median. Moreover, Sameer Kothari also holds ₹6.6b worth of Hindustan Foods stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹16m	₹16m	100%
Other	-	-	-
Total Compensation	₹16m	₹16m	100%

On an industry level, roughly 96% of total compensation represents salary and 4% is other remuneration. Speaking on a company level, Hindustan Foods prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Hindustan Foods Limited's Growth

Hindustan Foods Limited's earnings per share (EPS) grew 48% per year over the last three years. Its revenue is up 20% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Hindustan Foods Limited Been A Good Investment?

Boasting a total shareholder return of 201% over three years, Hindustan Foods Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Hindustan Foods pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Hindustan Foods we think you should know about.

Important note: Hindustan Foods is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.