We Think The Compensation For RHI Magnesita India Limited's (NSE:RHIM) CEO Looks About Right

Key Insights

• RHI Magnesita India will host its Annual General Meeting on 27th of September
• CEO Parmod Sagar's total compensation includes salary of ₹17.0m
• Total compensation is similar to the industry average
• RHI Magnesita India's EPS declined by 75% over the past three years while total shareholder return over the past three years was 70%

Under the guidance of CEO Parmod Sagar, RHI Magnesita India Limited (NSE:RHIM) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 27th of September. Here is our take on why we think the CEO compensation looks appropriate.

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 ₹124b, and paid its CEO total annual compensation worth ₹56m over the year to March 2024. We note that's an increase of 28% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹17m.

In comparison with other companies in the Indian Basic Materials industry with market capitalizations ranging from ₹84b to ₹267b, the reported median CEO total compensation was ₹70m. So it looks like RHI Magnesita India compensates Parmod Sagar in line with the median for the industry.

Talking in terms of the industry, salary represented approximately 84% of total compensation out of all the companies we analyzed, while other remuneration made up 16% 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 total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked 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 75% per year. It achieved revenue growth of 22% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. 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?

Most shareholders would probably be pleased with RHI Magnesita India Limited for providing a total return of 70% 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.

In Summary...

Although the company has performed relatively well, we still think there are some areas that could be improved. Still, we think that until shareholders see an improvement in EPS growth, they may find it hard to justify a pay rise for the CEO.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for RHI Magnesita India that investors should be aware of in a dynamic business environment.

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.