Increases to CEO Compensation Might Be Put On Hold For Now at Grasim Industries Limited (NSE:GRASIM)

Simply Wall St
August 20, 2021
Source: Shutterstock

Performance at Grasim Industries Limited (NSE:GRASIM) has been reasonably good and CEO Dilip Gaur has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 27 August 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Grasim Industries

Comparing Grasim Industries Limited's CEO Compensation With the industry

At the time of writing, our data shows that Grasim Industries Limited has a market capitalization of ₹975b, and reported total annual CEO compensation of ₹85m for the year to March 2021. Notably, that's an increase of 29% over the year before. We note that the salary portion, which stands at ₹68.7m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations above ₹595b, reported a median total CEO compensation of ₹50m. This suggests that Dilip Gaur is paid more than the median for the industry. Furthermore, Dilip Gaur directly owns ₹57m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212019Proportion (2021)
Salary ₹69m ₹47m 81%
Other ₹16m ₹19m 19%
Total Compensation₹85m ₹65m100%

On an industry level, around 87% of total compensation represents salary and 13% is other remuneration. Our data reveals that Grasim Industries allocates salary more or less in line with the wider market. 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.

NSEI:GRASIM CEO Compensation August 21st 2021

Grasim Industries Limited's Growth

Grasim Industries Limited's earnings per share (EPS) grew 23% per year over the last three years. Its revenue is up 17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Grasim Industries Limited Been A Good Investment?

We think that the total shareholder return of 44%, over three years, would leave most Grasim Industries Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

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 Grasim Industries (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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.

If you’re looking to trade Grasim Industries, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.