We Think Shareholders May Consider Being More Generous With RHI Magnesita India Limited's (NSE:RHIM) CEO Compensation Package

Key Insights

• RHI Magnesita India will host its Annual General Meeting on 28th of September
• Salary of ₹14.8m is part of CEO Parmod Sagar's total remuneration
• The total compensation is 38% less than the average for the industry
• RHI Magnesita India's total shareholder return over the past three years was 313% while its EPS was down 39% over the past three years

Shareholders will be pleased by the robust performance of RHI Magnesita India Limited (NSE:RHIM) recently and this will be kept in mind in the upcoming AGM on 28th of September. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

Check out our latest analysis for RHI Magnesita India

Comparing RHI Magnesita India Limited's CEO Compensation With The Industry

According to our data, RHI Magnesita India Limited has a market capitalization of ₹156b, and paid its CEO total annual compensation worth ₹44m over the year to March 2023. We note that's an increase of 29% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹15m.

In comparison with other companies in the Indian Basic Materials industry with market capitalizations ranging from ₹83b to ₹266b, the reported median CEO total compensation was ₹70m. Accordingly, RHI Magnesita India pays its CEO under the industry median. What's more, Parmod Sagar holds ₹10m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	₹15m	₹13m	34%
Other	₹29m	₹20m	66%
Total Compensation	₹44m	₹34m	100%

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. In RHI Magnesita India's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

RHI Magnesita India Limited's Growth

Over the last three years, RHI Magnesita India Limited has shrunk its earnings per share by 39% per year. In the last year, its revenue is up 41%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has RHI Magnesita India Limited Been A Good Investment?

We think that the total shareholder return of 313%, over three years, would leave most RHI Magnesita India Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for RHI Magnesita India (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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.