Rashtriya Chemicals and Fertilizers Limited's (NSE:RCF) CEO Compensation Looks Acceptable To Us And Here's Why

Key Insights

• Rashtriya Chemicals and Fertilizers will host its Annual General Meeting on 30th of September
• CEO Shriniwas Mudgerikar's total compensation includes salary of ₹9.60m
• The total compensation is 78% less than the average for the industry
• Over the past three years, Rashtriya Chemicals and Fertilizers' EPS fell by 33% and over the past three years, the total shareholder return was 142%

Shareholders may be wondering what CEO Shriniwas Mudgerikar plans to do to improve the less than great performance at Rashtriya Chemicals and Fertilizers Limited (NSE:RCF) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 30th of September. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for Rashtriya Chemicals and Fertilizers

Comparing Rashtriya Chemicals and Fertilizers Limited's CEO Compensation With The Industry

According to our data, Rashtriya Chemicals and Fertilizers Limited has a market capitalization of ₹104b, and paid its CEO total annual compensation worth ₹11m over the year to March 2024. Notably, that's an increase of 15% over the year before. In particular, the salary of ₹9.60m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Indian Chemicals industry with market capitalizations ranging from ₹84b to ₹267b, the reported median CEO total compensation was ₹52m. That is to say, Shriniwas Mudgerikar is paid under the industry median.

Component	2024	2023	Proportion (2024)
Salary	₹9.6m	₹7.1m	84%
Other	₹1.8m	₹2.8m	16%
Total Compensation	₹11m	₹9.9m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Although there is a difference in how total compensation is set, Rashtriya Chemicals and Fertilizers more or less reflects the market in terms of setting the salary. 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 Rashtriya Chemicals and Fertilizers Limited's Growth Numbers

Rashtriya Chemicals and Fertilizers Limited has reduced its earnings per share by 33% a year over the last three years. In the last year, its revenue is down 16%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Rashtriya Chemicals and Fertilizers Limited Been A Good Investment?

Most shareholders would probably be pleased with Rashtriya Chemicals and Fertilizers Limited for providing a total return of 142% over three years. 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.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is concerning) in Rashtriya Chemicals and Fertilizers we think you should know about.

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.