Shareholders May Be Wary Of Increasing McLeod Russel India Limited's (NSE:MCLEODRUSS) CEO Compensation Package

Key Insights

• McLeod Russel India's Annual General Meeting to take place on 30th of September
• Salary of ₹15.8m is part of CEO AK Khaitan's total remuneration
• Total compensation is 776% above industry average
• McLeod Russel India's three-year loss to shareholders was 17% while its EPS was down 61% over the past three years

McLeod Russel India Limited (NSE:MCLEODRUSS) has not performed well recently and CEO AK Khaitan will probably need to up their game. At the upcoming AGM on 30th of September, shareholders can hear from the board including their plans for turning around performance. 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. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for McLeod Russel India

Comparing McLeod Russel India Limited's CEO Compensation With The Industry

According to our data, McLeod Russel India Limited has a market capitalization of ₹2.6b, and paid its CEO total annual compensation worth ₹32m over the year to March 2024. Notably, that's a decrease of 12% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹16m.

In comparison with other companies in the Indian Food industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹3.6m. Accordingly, our analysis reveals that McLeod Russel India Limited pays AK Khaitan north of the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹16m	₹18m	50%
Other	₹16m	₹18m	50%
Total Compensation	₹32m	₹36m	100%

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 McLeod Russel India allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at McLeod Russel India Limited's Growth Numbers

McLeod Russel India Limited has reduced its earnings per share by 61% a year over the last three years. It saw its revenue drop 19% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 McLeod Russel India Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in McLeod Russel India Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for McLeod Russel India you should be aware of, and 1 of them is potentially serious.

Switching gears from McLeod Russel India, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.