Here's Why Shareholders May Want To Be Cautious With Increasing Gillette India Limited's (NSE:GILLETTE) CEO Pay Packet

In the past three years, shareholders of Gillette India Limited (NSE:GILLETTE) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 23 November 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Gillette India

How Does Total Compensation For Madhusudan Gopalan Compare With Other Companies In The Industry?

According to our data, Gillette India Limited has a market capitalization of ₹183b, and paid its CEO total annual compensation worth ₹9.2m over the year to June 2021. That's just a smallish increase of 8.0% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹9.2m.

On examining similar-sized companies in the industry with market capitalizations between ₹149b and ₹476b, we discovered that the median CEO total compensation of that group was ₹9.2m. From this we gather that Madhusudan Gopalan is paid around the median for CEOs in the industry.

Component	2021	2020	Proportion (2021)
Salary	₹9.2m	₹8.6m	100%
Other	-	-	-
Total Compensation	₹9.2m	₹8.6m	100%

On an industry level, around 97% of total compensation represents salary and 3% is other remuneration. At the company level, Gillette India pays Madhusudan Gopalan solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Gillette India Limited's Growth Numbers

Gillette India Limited has seen its earnings per share (EPS) increase by 8.9% a year over the past three years. In the last year, its revenue is up 19%.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. 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 Gillette India Limited Been A Good Investment?

Given the total shareholder loss of 11% over three years, many shareholders in Gillette India Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Gillette India rewards its CEO solely through a salary, ignoring non-salary benefits completely. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues 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 did our research and spotted 1 warning sign for Gillette India that investors should look into moving forward.

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.

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.

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