Here's Why Shareholders May Want To Be Cautious With Increasing EPL Limited's (NSE:EPL) CEO Pay Packet

Key Insights

• EPL's Annual General Meeting to take place on 21st of August
• CEO Anand Kripalu's total compensation includes salary of ₹18.5m
• The overall pay is 96% above the industry average
• Over the past three years, EPL's EPS fell by 4.3% and over the past three years, the total shareholder return was 14%

Despite EPL Limited's (NSE:EPL) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 21st 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. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for EPL

How Does Total Compensation For Anand Kripalu Compare With Other Companies In The Industry?

According to our data, EPL Limited has a market capitalization of ₹78b, and paid its CEO total annual compensation worth ₹47m over the year to March 2024. That's a notable decrease of 33% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹19m.

In comparison with other companies in the Indian Packaging industry with market capitalizations ranging from ₹34b to ₹134b, the reported median CEO total compensation was ₹24m. Hence, we can conclude that Anand Kripalu is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹19m	₹18m	39%
Other	₹29m	₹52m	61%
Total Compensation	₹47m	₹70m	100%

Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. In EPL's case, non-salary compensation represents a greater slice of total remuneration, 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 EPL Limited's Growth Numbers

Over the last three years, EPL Limited has shrunk its earnings per share by 4.3% per year. It achieved revenue growth of 6.3% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet 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 EPL Limited Been A Good Investment?

With a total shareholder return of 14% over three years, EPL Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

So you may want to check if insiders are buying EPL shares with their own money (free access).

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.