Does Agarwal Industrial's (NSE:AGARIND) CEO Salary Compare Well With The Performance Of The Company?

Jaiprakash Agarwal is the CEO of Agarwal Industrial Corporation Limited (NSE:AGARIND), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Agarwal Industrial.

Check out our latest analysis for Agarwal Industrial

How Does Total Compensation For Jaiprakash Agarwal Compare With Other Companies In The Industry?

According to our data, Agarwal Industrial Corporation Limited has a market capitalization of ₹1.0b, and paid its CEO total annual compensation worth ₹5.4m over the year to March 2020. Notably, that's an increase of 29% over the year before. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹5.4m.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.6m. From this we gather that Jaiprakash Agarwal is paid around the median for CEOs in the industry. Moreover, Jaiprakash Agarwal also holds ₹78m worth of Agarwal Industrial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. At the company level, Agarwal Industrial pays Jaiprakash Agarwal solely through a salary, preferring to go down a conventional route. 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.

Agarwal Industrial Corporation Limited's Growth

Agarwal Industrial Corporation Limited's earnings per share (EPS) grew 24% per year over the last three years. Its revenue is up 9.2% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Agarwal Industrial Corporation Limited Been A Good Investment?

Since shareholders would have lost about 84% over three years, some Agarwal Industrial Corporation Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Agarwal Industrial rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Jaiprakash is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Agarwal Industrial that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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