Shareholders Will Probably Hold Off On Increasing Vidhi Specialty Food Ingredients Limited's (NSE:VIDHIING) CEO Compensation For The Time Being

Key Insights

• Vidhi Specialty Food Ingredients to hold its Annual General Meeting on 24th of September
• CEO Bipin Manek's total compensation includes salary of ₹6.00m
• The overall pay is 52% above the industry average
• Vidhi Specialty Food Ingredients' EPS declined by 5.5% over the past three years while total shareholder return over the past three years was 21%

The share price of Vidhi Specialty Food Ingredients Limited (NSE:VIDHIING) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24th of September. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Vidhi Specialty Food Ingredients

Comparing Vidhi Specialty Food Ingredients Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Vidhi Specialty Food Ingredients Limited has a market capitalization of ₹22b, and reported total annual CEO compensation of ₹26m for the year to March 2024. We note that's an increase of 11% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹6.0m.

On examining similar-sized companies in the Indian Chemicals industry with market capitalizations between ₹8.4b and ₹34b, we discovered that the median CEO total compensation of that group was ₹17m. This suggests that Bipin Manek is paid more than the median for the industry. Moreover, Bipin Manek also holds ₹6.3b worth of Vidhi Specialty Food Ingredients stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹6.0m	₹6.0m	24%
Other	₹20m	₹17m	76%
Total Compensation	₹26m	₹23m	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. Vidhi Specialty Food Ingredients 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 Vidhi Specialty Food Ingredients Limited's Growth Numbers

Over the last three years, Vidhi Specialty Food Ingredients Limited has shrunk its earnings per share by 5.5% per year. In the last year, its revenue is down 15%.

Overall this is not a very positive result for shareholders. 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. 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 Vidhi Specialty Food Ingredients Limited Been A Good Investment?

Vidhi Specialty Food Ingredients Limited has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Vidhi Specialty Food Ingredients that you should be aware of before investing.

Important note: Vidhi Specialty Food Ingredients 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.