We Think Some Shareholders May Hesitate To Increase Uflex Limited's (NSE:UFLEX) CEO Compensation

Key Insights

• Uflex's Annual General Meeting to take place on 19th of September
• CEO Ashok Chaturvedi's total compensation includes salary of ₹113.6m
• The total compensation is 621% higher than the average for the industry
• Uflex's total shareholder return over the past three years was 41% while its EPS was down 86% over the past three years

The share price of Uflex Limited (NSE:UFLEX) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 19th of September. 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.

View our latest analysis for Uflex

How Does Total Compensation For Ashok Chaturvedi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Uflex Limited has a market capitalization of ₹55b, and reported total annual CEO compensation of ₹167m for the year to March 2024. That's just a smallish increase of 5.4% on last year. In particular, the salary of ₹113.6m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Indian Packaging industry with market capitalizations ranging from ₹34b to ₹134b, the reported median CEO total compensation was ₹23m. Hence, we can conclude that Ashok Chaturvedi is remunerated higher than the industry median. Furthermore, Ashok Chaturvedi directly owns ₹1.7b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹114m	₹105m	68%
Other	₹53m	₹53m	32%
Total Compensation	₹167m	₹158m	100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. In Uflex's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Uflex Limited's Growth Numbers

Over the last three years, Uflex Limited has shrunk its earnings per share by 86% per year. In the last year, its revenue is down 1.4%.

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 Uflex Limited Been A Good Investment?

We think that the total shareholder return of 41%, over three years, would leave most Uflex Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same 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 question whether these strong returns will continue. 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.

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 Uflex (of which 2 are concerning!) 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.