The Compensation For Vadilal Industries Limited's (NSE:VADILALIND) CEO Looks Deserved And Here's Why

The performance at Vadilal Industries Limited (NSE:VADILALIND) has been quite strong recently and CEO Rajeshbhai Gandhi has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 29 September 2022. 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. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for Vadilal Industries

How Does Total Compensation For Rajeshbhai Gandhi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Vadilal Industries Limited has a market capitalization of ₹18b, and reported total annual CEO compensation of ₹9.6m for the year to March 2022. That's a modest increase of 6.8% on the prior year. In particular, the salary of ₹6.32m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between ₹8.0b and ₹32b, we discovered that the median CEO total compensation of that group was ₹13m. So it looks like Vadilal Industries compensates Rajeshbhai Gandhi in line with the median for the industry. Moreover, Rajeshbhai Gandhi also holds ₹727m worth of Vadilal Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹6.3m	₹5.9m	66%
Other	₹3.3m	₹3.1m	34%
Total Compensation	₹9.6m	₹9.0m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Vadilal Industries 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.

Vadilal Industries Limited's Growth

Vadilal Industries Limited has seen its earnings per share (EPS) increase by 28% a year over the past three years. It achieved revenue growth of 63% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Vadilal Industries Limited Been A Good Investment?

Boasting a total shareholder return of 203% over three years, Vadilal Industries Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same 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 1 warning sign for Vadilal Industries that investors should look into moving forward.

Important note: Vadilal Industries 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.