We Think Some Shareholders May Hesitate To Increase Insecticides (India) Limited's (NSE:INSECTICID) CEO Compensation

The share price of Insecticides (India) Limited (NSE:INSECTICID) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 23 September 2022. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. 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 Insecticides (India)

Comparing Insecticides (India) Limited's CEO Compensation With The Industry

According to our data, Insecticides (India) Limited has a market capitalization of ₹19b, and paid its CEO total annual compensation worth ₹42m over the year to March 2022. That's a fairly small increase of 5.0% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹9.0m.

On examining similar-sized companies in the industry with market capitalizations between ₹8.0b and ₹32b, we discovered that the median CEO total compensation of that group was ₹18m. This suggests that Rajesh Aggarwal is paid more than the median for the industry. Moreover, Rajesh Aggarwal also holds ₹6.2b worth of Insecticides (India) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹9.0m	₹9.0m	22%
Other	₹33m	₹31m	78%
Total Compensation	₹42m	₹40m	100%

Speaking on an industry level, nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. In Insecticides (India)'s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Insecticides (India) Limited's Growth

Over the last three years, Insecticides (India) Limited has shrunk its earnings per share by 2.4% per year. In the last year, its revenue is up 7.9%.

A lack of EPS improvement is not good to see. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Insecticides (India) Limited Been A Good Investment?

We think that the total shareholder return of 67%, over three years, would leave most Insecticides (India) Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 did our research and spotted 1 warning sign for Insecticides (India) that investors should look into moving forward.

Important note: Insecticides (India) is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.