Shareholders May Be More Conservative With Hindcon Chemicals Limited's (NSE:HINDCON) CEO Compensation For Now

Key Insights

• Hindcon Chemicals to hold its Annual General Meeting on 20th of August
• CEO Sanjay Goenka's total compensation includes salary of ₹8.70m
• The total compensation is 55% higher than the average for the industry
• Over the past three years, Hindcon Chemicals' EPS fell by 7.1% and over the past three years, the total shareholder return was 300%

Hindcon Chemicals Limited (NSE:HINDCON) 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. The upcoming AGM on 20th of August may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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 Hindcon Chemicals

Comparing Hindcon Chemicals Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Hindcon Chemicals Limited has a market capitalization of ₹2.6b, and reported total annual CEO compensation of ₹8.7m for the year to March 2024. This was the same amount the CEO received in the prior year. Notably, the salary of ₹8.7m is the entirety of the CEO compensation.

In comparison with other companies in the Indian Chemicals industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹5.6m. This suggests that Sanjay Goenka is paid more than the median for the industry. Furthermore, Sanjay Goenka directly owns ₹754m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹8.7m	₹8.7m	100%
Other	-	-	-
Total Compensation	₹8.7m	₹8.7m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. On a company level, Hindcon Chemicals prefers to reward its CEO through a salary, opting not to pay Sanjay Goenka through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Hindcon Chemicals Limited's Growth Numbers

Over the last three years, Hindcon Chemicals Limited has shrunk its earnings per share by 7.1% per year. In the last year, its revenue is down 27%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hindcon Chemicals Limited Been A Good Investment?

Boasting a total shareholder return of 300% over three years, Hindcon Chemicals Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Hindcon Chemicals rewards its CEO solely through a salary, ignoring non-salary benefits completely. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Hindcon Chemicals that you should be aware of before investing.

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.