Here's Why Shareholders May Want To Be Cautious With Increasing Aries Agro Limited's (NSE:ARIES) CEO Pay Packet

Under the guidance of CEO Rahul Mirchandani, Aries Agro Limited (NSE:ARIES) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 29 September 2022. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Aries Agro

How Does Total Compensation For Rahul Mirchandani Compare With Other Companies In The Industry?

Our data indicates that Aries Agro Limited has a market capitalization of ₹1.8b, and total annual CEO compensation was reported as ₹21m for the year to March 2022. This means that the compensation hasn't changed much from last year. In particular, the salary of ₹19.4m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below ₹16b, reported a median total CEO compensation of ₹6.8m. Hence, we can conclude that Rahul Mirchandani is remunerated higher than the industry median. Moreover, Rahul Mirchandani also holds ₹468m worth of Aries Agro stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹19m	₹19m	92%
Other	₹1.7m	₹1.7m	8%
Total Compensation	₹21m	₹21m	100%

Talking in terms of the industry, salary represented approximately 86% of total compensation out of all the companies we analyzed, while other remuneration made up 14% of the pie. Although there is a difference in how total compensation is set, Aries Agro more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Aries Agro Limited's Growth

Aries Agro Limited's earnings per share (EPS) grew 11% per year over the last three years. Its revenue is up 15% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, 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 Aries Agro Limited Been A Good Investment?

We think that the total shareholder return of 122%, over three years, would leave most Aries Agro 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...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Aries Agro (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.