We Think Shareholders May Want To Consider A Review Of Bodal Chemicals Limited's (NSE:BODALCHEM) CEO Compensation Package

Key Insights

• Bodal Chemicals to hold its Annual General Meeting on 24th of September
• CEO Sureshbhai Patel's total compensation includes salary of ₹16.2m
• The total compensation is 216% higher than the average for the industry
• Bodal Chemicals' three-year loss to shareholders was 21% while its EPS was down 68% over the past three years

The results at Bodal Chemicals Limited (NSE:BODALCHEM) have been quite disappointing recently and CEO Sureshbhai Patel bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 24th of September. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Bodal Chemicals

Comparing Bodal Chemicals Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Bodal Chemicals Limited has a market capitalization of ₹11b, and reported total annual CEO compensation of ₹18m for the year to March 2024. We note that's a decrease of 26% compared to last year. Notably, the salary which is ₹16.2m, represents most of the total compensation being paid.

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 Sureshbhai Patel is paid more than the median for the industry. Moreover, Sureshbhai Patel also holds ₹3.5b worth of Bodal Chemicals stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹16m	₹16m	92%
Other	₹1.5m	₹7.6m	8%
Total Compensation	₹18m	₹24m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Bodal Chemicals is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Bodal Chemicals Limited's Growth

Over the last three years, Bodal Chemicals Limited has shrunk its earnings per share by 68% per year. It achieved revenue growth of 2.8% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Bodal Chemicals Limited Been A Good Investment?

With a three year total loss of 21% for the shareholders, Bodal Chemicals Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Bodal Chemicals (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.