This Is The Reason Why We Think Vinati Organics Limited's (NSE:VINATIORGA) CEO Might Be Underpaid

Shareholders will be pleased by the impressive results for Vinati Organics Limited (NSE:VINATIORGA) recently and CEO Vinati Mutreja has played a key role. At the upcoming AGM on 03 July 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for Vinati Organics

Comparing Vinati Organics Limited's CEO Compensation With the industry

Our data indicates that Vinati Organics Limited has a market capitalization of ₹190b, and total annual CEO compensation was reported as ₹13m for the year to March 2021. We note that's an increase of 9.6% above last year. We note that the salary portion, which stands at ₹10.6m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between ₹148b and ₹475b had a median total CEO compensation of ₹64m. This suggests that Vinati Mutreja is paid below the industry median. Furthermore, Vinati Mutreja directly owns ₹2.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹11m	₹9.7m	84%
Other	₹2.0m	₹1.8m	16%
Total Compensation	₹13m	₹11m	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. There isn't a significant difference between Vinati Organics and the broader market, in terms of salary allocation in the overall compensation package. 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.

Vinati Organics Limited's Growth

Over the past three years, Vinati Organics Limited has seen its earnings per share (EPS) grow by 23% per year. Its revenue is down 7.3% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Vinati Organics Limited Been A Good Investment?

Boasting a total shareholder return of 298% over three years, Vinati Organics Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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. We did our research and spotted 1 warning sign for Vinati Organics that investors should look into moving forward.

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.

If you’re looking to trade Vinati Organics, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.