Shareholders May Not Be So Generous With Aries Agro Limited's (NSE:ARIES) CEO Compensation And Here's Why

Key Insights

• Aries Agro will host its Annual General Meeting on 29th of September
• CEO Rahul Mirchandani's total compensation includes salary of ₹22.6m
• The overall pay is 311% above the industry average
• Aries Agro's total shareholder return over the past three years was 131% while its EPS grew by 9.1% over the past three years

Under the guidance of CEO Rahul Mirchandani, Aries Agro Limited (NSE:ARIES) has performed reasonably well 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 29th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Aries Agro

Comparing Aries Agro Limited's CEO Compensation With The Industry

Our data indicates that Aries Agro Limited has a market capitalization of ₹2.3b, and total annual CEO compensation was reported as ₹25m for the year to March 2023. We note that's an increase of 16% above last year. In particular, the salary of ₹22.6m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Indian Chemicals industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹6.0m. This suggests that Rahul Mirchandani is paid more than the median for the industry. Moreover, Rahul Mirchandani also holds ₹606m 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	2023	2022	Proportion (2023)
Salary	₹23m	₹19m	92%
Other	₹2.1m	₹1.7m	8%
Total Compensation	₹25m	₹21m	100%

On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. Aries Agro is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Aries Agro Limited's Growth Numbers

Over the past three years, Aries Agro Limited has seen its earnings per share (EPS) grow by 9.1% per year. It achieved revenue growth of 3.4% over the last year.

We'd prefer higher revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. 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?

Boasting a total shareholder return of 131% over three years, Aries Agro Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Aries Agro that investors should be aware of in a dynamic business environment.

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.