Cupid Limited's (NSE:CUPID) CEO Compensation Is Looking A Bit Stretched At The Moment

The share price of Cupid Limited (NSE:CUPID) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 28 September 2022. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Cupid

How Does Total Compensation For Omprakash Garg Compare With Other Companies In The Industry?

According to our data, Cupid Limited has a market capitalization of ₹3.1b, and paid its CEO total annual compensation worth ₹14m over the year to March 2022. That is, the compensation was roughly the same as last year. Notably, the salary which is ₹7.64m, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under ₹16b, the reported median total CEO compensation was ₹2.2m. Accordingly, our analysis reveals that Cupid Limited pays Omprakash Garg north of the industry median. What's more, Omprakash Garg holds ₹6.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	₹7.6m	₹6.4m	53%
Other	₹6.7m	₹8.2m	47%
Total Compensation	₹14m	₹15m	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. Cupid pays a modest slice of remuneration through salary, as compared to the broader 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.

Cupid Limited's Growth

Over the last three years, Cupid Limited has shrunk its earnings per share by 5.4% per year. It saw its revenue drop 11% over the last 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Cupid Limited Been A Good Investment?

We think that the total shareholder return of 78%, over three years, would leave most Cupid Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Cupid that investors should be aware of in a dynamic business environment.

Important note: Cupid 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.