Everest Kanto Cylinder Limited's (NSE:EKC) CEO Compensation Looks Acceptable To Us And Here's Why

Key Insights

• Everest Kanto Cylinder's Annual General Meeting to take place on 30th of August
• Salary of ₹21.7m is part of CEO Puneet Prem Khurana's total remuneration
• The total compensation is similar to the average for the industry
• Everest Kanto Cylinder's total shareholder return over the past three years was 73% while its EPS was down 12% over the past three years

Everest Kanto Cylinder Limited (NSE:EKC) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 30th of August. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Everest Kanto Cylinder

How Does Total Compensation For Puneet Prem Khurana Compare With Other Companies In The Industry?

At the time of writing, our data shows that Everest Kanto Cylinder Limited has a market capitalization of ₹21b, and reported total annual CEO compensation of ₹30m for the year to March 2024. We note that's a decrease of 15% compared to last year. In particular, the salary of ₹21.7m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Indian Packaging industry with market caps ranging from ₹8.4b to ₹34b, we found that the median CEO total compensation was ₹32m. This suggests that Everest Kanto Cylinder remunerates its CEO largely in line with the industry average. Moreover, Puneet Prem Khurana also holds ₹1.9b worth of Everest Kanto Cylinder 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	₹22m	₹22m	71%
Other	₹8.7m	₹14m	29%
Total Compensation	₹30m	₹36m	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. It's interesting to note that Everest Kanto Cylinder allocates a smaller portion of compensation to salary in comparison to the broader 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.

A Look at Everest Kanto Cylinder Limited's Growth Numbers

Over the last three years, Everest Kanto Cylinder Limited has shrunk its earnings per share by 12% per year. It achieved revenue growth of 12% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Everest Kanto Cylinder Limited Been A Good Investment?

Most shareholders would probably be pleased with Everest Kanto Cylinder Limited for providing a total return of 73% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Everest Kanto Cylinder that you should be aware of before investing.

Important note: Everest Kanto Cylinder is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.