Increases to CEO Compensation Might Be Put On Hold For Now at Emami Paper Mills Limited (NSE:EMAMIPAP)

Key Insights

• Emami Paper Mills' Annual General Meeting to take place on 28th of August
• CEO Vivek Chawla's total compensation includes salary of ₹23.1m
• The total compensation is 1,014% higher than the average for the industry
• Emami Paper Mills' three-year loss to shareholders was 24% while its EPS grew by 0.5% over the past three years

In the past three years, the share price of Emami Paper Mills Limited (NSE:EMAMIPAP) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 28th of August. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Emami Paper Mills

Comparing Emami Paper Mills Limited's CEO Compensation With The Industry

According to our data, Emami Paper Mills Limited has a market capitalization of ₹7.8b, and paid its CEO total annual compensation worth ₹69m over the year to March 2024. We note that's an increase of 28% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹23m.

On comparing similar-sized companies in the Indian Forestry industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹6.2m. Hence, we can conclude that Vivek Chawla is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹23m	₹22m	34%
Other	₹46m	₹32m	66%
Total Compensation	₹69m	₹54m	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. It's interesting to note that Emami Paper Mills allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Emami Paper Mills Limited's Growth Numbers

Emami Paper Mills Limited saw earnings per share stay pretty flat over the last three years. Its revenue is down 12% 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Emami Paper Mills Limited Been A Good Investment?

Given the total shareholder loss of 24% over three years, many shareholders in Emami Paper Mills Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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've identified 3 warning signs for Emami Paper Mills that investors should be aware of in a dynamic business environment.

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.