What Can We Conclude About Aries Agro's (NSE:ARIES) CEO Pay?

Rahul Mirchandani became the CEO of Aries Agro Limited (NSE:ARIES) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Aries Agro.

Check out 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 ₹1.3b, and total annual CEO compensation was reported as ₹18m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of ₹16.2m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹6.5m. Hence, we can conclude that Rahul Mirchandani is remunerated higher than the industry median. Moreover, Rahul Mirchandani also holds ₹310m worth of Aries Agro stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. There isn't a significant difference between Aries Agro and the broader market, in terms of salary allocation in the overall compensation package. 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.

A Look at Aries Agro Limited's Growth Numbers

Aries Agro Limited's earnings per share (EPS) grew 10% per year over the last three years. In the last year, its revenue is up 21%.

Overall this is a positive result for shareholders, showing that the company has improved in recent 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?

Given the total shareholder loss of 52% over three years, many shareholders in Aries Agro Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Aries Agro Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Rahul is underpaid, in fact compensation is definitely on the higher side.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Aries Agro you should be aware of, and 1 of them is potentially serious.

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.

If you’re looking to trade Aries Agro, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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