Atul Ltd's (NSE:ATUL) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Atul's Annual General Meeting to take place on 26th of July
• CEO Sunil Lalbhai's total compensation includes salary of ₹50.1m
• The total compensation is 119% higher than the average for the industry
• Atul's three-year loss to shareholders was 24% while its EPS was down 21% over the past three years

The results at Atul Ltd (NSE:ATUL) have been quite disappointing recently and CEO Sunil Lalbhai bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 26th of July. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Atul

How Does Total Compensation For Sunil Lalbhai Compare With Other Companies In The Industry?

Our data indicates that Atul Ltd has a market capitalization of ₹206b, and total annual CEO compensation was reported as ₹103m for the year to March 2024. We note that's a decrease of 23% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹50m.

On comparing similar companies from the Indian Chemicals industry with market caps ranging from ₹167b to ₹535b, we found that the median CEO total compensation was ₹47m. Hence, we can conclude that Sunil Lalbhai is remunerated higher than the industry median. What's more, Sunil Lalbhai holds ₹1.1b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹50m	₹58m	48%
Other	₹53m	₹77m	52%
Total Compensation	₹103m	₹135m	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. Atul sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Atul Ltd's Growth

Over the last three years, Atul Ltd has shrunk its earnings per share by 21% per year. In the last year, its revenue is down 13%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Atul Ltd Been A Good Investment?

With a three year total loss of 24% for the shareholders, Atul Ltd would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 1 warning sign for Atul 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.

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