Here's Why Shareholders May Consider Paying Deepak Nitrite Limited's (NSE:DEEPAKNTR) CEO A Little More

Key Insights

• Deepak Nitrite's Annual General Meeting to take place on 6th of August
• Total pay for CEO Maulik Mehta includes ₹24.1m salary
• Total compensation is 77% below industry average
• Deepak Nitrite's total shareholder return over the past three years was 48% while its EPS grew by 1.5% over the past three years

Shareholders will probably not be disappointed by the robust results at Deepak Nitrite Limited (NSE:DEEPAKNTR) recently and they will be keeping this in mind as they go into the AGM on 6th of August. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for Deepak Nitrite

Comparing Deepak Nitrite Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Deepak Nitrite Limited has a market capitalization of ₹420b, and reported total annual CEO compensation of ₹42m for the year to March 2024. That's a notable increase of 12% on last year. In particular, the salary of ₹24.1m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the Indian Chemicals industry with market caps ranging from ₹335b to ₹1.0t, we found that the median CEO total compensation was ₹184m. In other words, Deepak Nitrite pays its CEO lower than the industry median. What's more, Maulik Mehta holds ₹404m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. Deepak Nitrite sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Deepak Nitrite Limited's Growth

Deepak Nitrite Limited has seen its earnings per share (EPS) increase by 1.5% a year over the past three years. Its revenue is down 3.6% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Deepak Nitrite Limited Been A Good Investment?

Most shareholders would probably be pleased with Deepak Nitrite Limited for providing a total return of 48% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

The company's overall performance, while not bad, could be better. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Deepak Nitrite (free visualization of insider trades).

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