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

Key Insights

• Aries Agro to hold its Annual General Meeting on 23rd of September
• Total pay for CEO Rahul Mirchandani includes ₹22.6m salary
• Total compensation is 339% above industry average
• Aries Agro's EPS grew by 6.6% over the past three years while total shareholder return over the past three years was 100%

CEO Rahul Mirchandani has done a decent job of delivering relatively good performance at Aries Agro Limited (NSE:ARIES) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 23rd of September. However, some shareholders may still want to keep CEO compensation within reason.

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 ₹3.7b, and total annual CEO compensation was reported as ₹25m for the year to March 2024. There was no change in the compensation compared to last year. In particular, the salary of ₹22.6m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Indian Chemicals industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹5.6m. This suggests that Rahul Mirchandani is paid more than the median for the industry. Furthermore, Rahul Mirchandani directly owns ₹984m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹23m	₹23m	92%
Other	₹2.1m	₹2.1m	8%
Total Compensation	₹25m	₹25m	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. 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.

A Look at Aries Agro Limited's Growth Numbers

Aries Agro Limited's earnings per share (EPS) grew 6.6% per year over the last three years. Its revenue is up 16% over the last year.

We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. 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 100%, 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.

To Conclude...

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, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for Aries Agro that investors should look into moving forward.

Switching gears from Aries Agro, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.