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.
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.
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.
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.
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.
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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.
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