Shareholders Will Probably Hold Off On Increasing Nilkamal Limited's (NSE:NILKAMAL) CEO Compensation For The Time Being

Key Insights

• Nilkamal to hold its Annual General Meeting on 19th of July
• Salary of ₹30.4m is part of CEO Hiten Parekh's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, Nilkamal's EPS grew by 2.7% and over the past three years, the total loss to shareholders 22%

The underwhelming share price performance of Nilkamal Limited (NSE:NILKAMAL) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 19th of July. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Nilkamal

How Does Total Compensation For Hiten Parekh Compare With Other Companies In The Industry?

Our data indicates that Nilkamal Limited has a market capitalization of ₹28b, and total annual CEO compensation was reported as ₹41m for the year to March 2024. That is, the compensation was roughly the same as last year. Notably, the salary which is ₹30.4m, represents most of the total compensation being paid.

On examining similar-sized companies in the Indian Packaging industry with market capitalizations between ₹17b and ₹67b, we discovered that the median CEO total compensation of that group was ₹41m. From this we gather that Hiten Parekh is paid around the median for CEOs in the industry. Furthermore, Hiten Parekh directly owns ₹3.5b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹30m	₹28m	75%
Other	₹10m	₹12m	25%
Total Compensation	₹41m	₹40m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Nilkamal is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Nilkamal Limited's Growth

Nilkamal Limited's earnings per share (EPS) grew 2.7% per year over the last three years. Its revenue is up 2.1% over the last year.

We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Nilkamal Limited Been A Good Investment?

Given the total shareholder loss of 22% over three years, many shareholders in Nilkamal Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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.

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 Nilkamal 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.

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