We Think Shareholders Are Less Likely To Approve A Pay Rise For Kiri Industries Limited's (NSE:KIRIINDUS) CEO For Now

As many shareholders of Kiri Industries Limited (NSE:KIRIINDUS) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 28 September 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Kiri Industries

Comparing Kiri Industries Limited's CEO Compensation With the industry

Our data indicates that Kiri Industries Limited has a market capitalization of ₹20b, and total annual CEO compensation was reported as ₹14m for the year to March 2021. Notably, that's an increase of 9.1% over the year before. Notably, the salary of ₹14m is the entirety of the CEO compensation.

For comparison, other companies in the same industry with market capitalizations ranging between ₹7.4b and ₹29b had a median total CEO compensation of ₹18m. From this we gather that Manishbhai Kiri is paid around the median for CEOs in the industry. Furthermore, Manishbhai Kiri directly owns ₹920m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹14m	₹13m	100%
Other	-	-	-
Total Compensation	₹14m	₹13m	100%

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 13% is other remuneration. At the company level, Kiri Industries pays Manishbhai Kiri solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Kiri Industries Limited's Growth Numbers

Kiri Industries Limited has seen its earnings per share (EPS) increase by 3.1% a year over the past three years. In the last year, its revenue is up 8.9%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Kiri Industries Limited Been A Good Investment?

Given the total shareholder loss of 7.8% over three years, many shareholders in Kiri Industries Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Kiri Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Kiri Industries that investors should look into moving forward.

Important note: Kiri Industries 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.

If you’re looking to trade Kiri 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

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.