We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Sharda Cropchem Limited's (NSE:SHARDACROP) CEO For Now

Key Insights

• Sharda Cropchem will host its Annual General Meeting on 9th of August
• CEO Ramprakash Bubna's total compensation includes salary of ₹19.1m
• The overall pay is 174% above the industry average
• Sharda Cropchem's EPS declined by 15% over the past three years while total shareholder return over the past three years was 73%

Sharda Cropchem Limited (NSE:SHARDACROP) 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. The upcoming AGM on 9th of August may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. 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.

View our latest analysis for Sharda Cropchem

How Does Total Compensation For Ramprakash Bubna Compare With Other Companies In The Industry?

According to our data, Sharda Cropchem Limited has a market capitalization of ₹50b, and paid its CEO total annual compensation worth ₹64m over the year to March 2024. That's a modest increase of 5.9% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹19m.

On comparing similar companies from the Indian Chemicals industry with market caps ranging from ₹17b to ₹67b, we found that the median CEO total compensation was ₹23m. Accordingly, our analysis reveals that Sharda Cropchem Limited pays Ramprakash Bubna north of the industry median. What's more, Ramprakash Bubna holds ₹7.8b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹19m	₹18m	30%
Other	₹45m	₹43m	70%
Total Compensation	₹64m	₹61m	100%

On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Sharda Cropchem pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Sharda Cropchem Limited's Growth Numbers

Over the last three years, Sharda Cropchem Limited has shrunk its earnings per share by 15% per year. It saw its revenue drop 14% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Sharda Cropchem Limited Been A Good Investment?

We think that the total shareholder return of 73%, over three years, would leave most Sharda Cropchem Limited shareholders smiling. 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...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Sharda Cropchem that investors should look into moving forward.

Important note: Sharda Cropchem is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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