Shareholders Will Probably Be Cautious Of Increasing Tainwala Chemicals and Plastics (India) Limited's (NSE:TAINWALCHM) CEO Compensation At The Moment

The share price of Tainwala Chemicals and Plastics (India) Limited (NSE:TAINWALCHM) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. The upcoming AGM on 28 September 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. 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.

Check out our latest analysis for Tainwala Chemicals and Plastics (India)

Comparing Tainwala Chemicals and Plastics (India) Limited's CEO Compensation With the industry

According to our data, Tainwala Chemicals and Plastics (India) Limited has a market capitalization of ₹758m, and paid its CEO total annual compensation worth ₹6.7m over the year to March 2021. We note that's a decrease of 8.9% compared to last year. In particular, the salary of ₹6.00m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.0m. This suggests that Tainwala Chemicals and Plastics (India) remunerates its CEO largely in line with the industry average.

Component	2021	2020	Proportion (2021)
Salary	₹6.0m	₹6.0m	89%
Other	₹720k	₹1.4m	11%
Total Compensation	₹6.7m	₹7.4m	100%

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 13% is other remuneration. Our data reveals that Tainwala Chemicals and Plastics (India) allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Tainwala Chemicals and Plastics (India) Limited's Growth

Over the last three years, Tainwala Chemicals and Plastics (India) Limited has shrunk its earnings per share by 42% per year. In the last year, its revenue changed by just 0.9%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Tainwala Chemicals and Plastics (India) Limited Been A Good Investment?

With a total shareholder return of 4.7% over three years, Tainwala Chemicals and Plastics (India) Limited has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. 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 is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Tainwala Chemicals and Plastics (India) you should be aware of, and 1 of them is concerning.

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.
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