Shareholders Would Not Be Objecting To Agarwal Industrial Corporation Limited's (NSE:AGARIND) CEO Compensation And Here's Why

We have been pretty impressed with the performance at Agarwal Industrial Corporation Limited (NSE:AGARIND) recently and CEO Jaiprakash Agarwal deserves a mention for their role in it. Coming up to the next AGM on 30 September 2022, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See 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 ₹8.5b, and paid its CEO total annual compensation worth ₹6.0m over the year to March 2022. There was no change in the compensation compared to last year. Notably, the salary of ₹6.0m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹16b, we found that the median total CEO compensation was ₹7.0m. From this we gather that Jaiprakash Agarwal is paid around the median for CEOs in the industry. What's more, Jaiprakash Agarwal holds ₹624m 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	₹6.0m	₹6.0m	100%
Other	-	-	-
Total Compensation	₹6.0m	₹6.0m	100%

On an industry level, roughly 86% of total compensation represents salary and 14% 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 dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Agarwal Industrial Corporation Limited's Growth Numbers

Over the past three years, Agarwal Industrial Corporation Limited has seen its earnings per share (EPS) grow by 44% per year. It achieved revenue growth of 52% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Agarwal Industrial Corporation Limited Been A Good Investment?

We think that the total shareholder return of 414%, over three years, would leave most Agarwal Industrial Corporation Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Agarwal Industrial rewards its CEO solely through a salary, ignoring non-salary benefits completely. The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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 2 warning signs for Agarwal Industrial 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.

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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.