Here's Why We Think Berger Paints India Limited's (NSE:BERGEPAINT) CEO Compensation Looks Fair

Key Insights

• Berger Paints India to hold its Annual General Meeting on 12th of August
• CEO Abhijit Roy's total compensation includes salary of ₹49.9m
• Total compensation is 55% below industry average
• Berger Paints India's three-year loss to shareholders was 18% while its EPS grew by 17% over the past three years

The performance at Berger Paints India Limited (NSE:BERGEPAINT) has been rather lacklustre of late and shareholders may be wondering what CEO Abhijit Roy is planning to do about this. At the next AGM coming up on 12th of August, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Berger Paints India

How Does Total Compensation For Abhijit Roy Compare With Other Companies In The Industry?

Our data indicates that Berger Paints India Limited has a market capitalization of ₹640b, and total annual CEO compensation was reported as ₹83m for the year to March 2024. We note that's an increase of 13% above last year. We note that the salary portion, which stands at ₹49.9m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Indian Chemicals industry with market capitalizations ranging between ₹335b and ₹1.0t had a median total CEO compensation of ₹184m. That is to say, Abhijit Roy is paid under the industry median. What's more, Abhijit Roy holds ₹51m 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	₹43m	60%
Other	₹33m	₹30m	40%
Total Compensation	₹83m	₹73m	100%

Talking in terms of the industry, salary represented approximately 87% of total compensation out of all the companies we analyzed, while other remuneration made up 13% of the pie. Berger Paints India sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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.

Berger Paints India Limited's Growth

Berger Paints India Limited's earnings per share (EPS) grew 17% per year over the last three years. In the last year, its revenue is up 6.0%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Berger Paints India Limited Been A Good Investment?

With a three year total loss of 18% for the shareholders, Berger Paints India Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

Shareholders may want to check for free if Berger Paints India insiders are buying or selling shares.

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