Here's Why Shareholders May Want To Be Cautious With Increasing Kalyani Steels Limited's (NSE:KSL) CEO Pay Packet

Key Insights

• Kalyani Steels to hold its Annual General Meeting on 22nd of August
• Total pay for CEO Ravindra Goyal includes ₹83.6m salary
• The overall pay is 664% above the industry average
• Kalyani Steels' total shareholder return over the past three years was 113% while its EPS was down 1.6% over the past three years

Kalyani Steels Limited (NSE:KSL) 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. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 22nd of August. 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 Kalyani Steels

Comparing Kalyani Steels Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Kalyani Steels Limited has a market capitalization of ₹34b, and reported total annual CEO compensation of ₹138m for the year to March 2024. We note that's an increase of 18% above last year. We note that the salary portion, which stands at ₹83.6m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Indian Metals and Mining industry with market caps ranging from ₹17b to ₹67b, we found that the median CEO total compensation was ₹18m. Accordingly, our analysis reveals that Kalyani Steels Limited pays Ravindra Goyal north of the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹84m	₹71m	61%
Other	₹54m	₹45m	39%
Total Compensation	₹138m	₹116m	100%

Talking in terms of the industry, salary represented approximately 100% of total compensation out of all the companies we analyzed, while other remuneration made up 0.03817986% of the pie. In Kalyani Steels' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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.

Kalyani Steels Limited's Growth

Kalyani Steels Limited has reduced its earnings per share by 1.6% a year over the last three years. In the last year, its revenue is up 1.1%.

Its a bit disappointing to see that the company has failed to grow its EPS. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Kalyani Steels Limited Been A Good Investment?

Boasting a total shareholder return of 113% over three years, Kalyani Steels Limited has done well by shareholders. 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...

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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 1 warning sign for Kalyani Steels that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.