Shareholders May Not Be So Generous With Max India Limited's (NSE:MAXIND) CEO Compensation And Here's Why

Key Insights

• Max India's Annual General Meeting to take place on 23rd of September
• Total pay for CEO Rajit Mehta includes ₹21.1m salary
• The overall pay is 1,145% above the industry average
• Max India's total shareholder return over the past three years was 247% while its EPS was down 37% over the past three years

Despite strong share price growth of 247% for Max India Limited (NSE:MAXIND) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 23rd of September. 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.

Check out our latest analysis for Max India

How Does Total Compensation For Rajit Mehta Compare With Other Companies In The Industry?

According to our data, Max India Limited has a market capitalization of ₹11b, and paid its CEO total annual compensation worth ₹28m over the year to March 2024. That's a notable decrease of 8.4% on last year. Notably, the salary which is ₹21.1m, represents most of the total compensation being paid.

In comparison with other companies in the Indian Healthcare industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹2.3m. This suggests that Rajit Mehta is paid more than the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	₹21m	₹19m	74%
Other	₹7.3m	₹12m	26%
Total Compensation	₹28m	₹31m	100%

Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 9% of the pie. Max India 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.

A Look at Max India Limited's Growth Numbers

Over the last three years, Max India Limited has shrunk its earnings per share by 37% per year. Its revenue is down 14% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Max India Limited Been A Good Investment?

Boasting a total shareholder return of 247% over three years, Max India Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current 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.

So you may want to check if insiders are buying Max India shares with their own money (free access).

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.