Here's Why Shareholders May Want To Be Cautious With Increasing Worth Peripherals Limited's (NSE:WORTH) CEO Pay Packet

Key Insights

• Worth Peripherals' Annual General Meeting to take place on 16th of August
• CEO Raminder Chadha's total compensation includes salary of ₹5.10m
• The total compensation is 34% higher than the average for the industry
• Worth Peripherals' EPS grew by 2.2% over the past three years while total shareholder return over the past three years was 31%

Under the guidance of CEO Raminder Chadha, Worth Peripherals Limited (NSE:WORTH) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 16th of August. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Worth Peripherals

How Does Total Compensation For Raminder Chadha Compare With Other Companies In The Industry?

According to our data, Worth Peripherals Limited has a market capitalization of ₹2.0b, and paid its CEO total annual compensation worth ₹5.1m over the year to March 2024. This was the same amount the CEO received in the prior year. Notably, the salary of ₹5.1m is the entirety of the CEO compensation.

On comparing similar-sized companies in the Indian Packaging industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹3.8m. Hence, we can conclude that Raminder Chadha is remunerated higher than the industry median. What's more, Raminder Chadha holds ₹879m 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	₹5.1m	₹5.1m	100%
Other	-	-	-
Total Compensation	₹5.1m	₹5.1m	100%

On an industry level, roughly 82% of total compensation represents salary and 18% is other remuneration. At the company level, Worth Peripherals pays Raminder Chadha solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Worth Peripherals Limited's Growth Numbers

Worth Peripherals Limited has seen its earnings per share (EPS) increase by 2.2% a year over the past three years. It saw its revenue drop 10% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Worth Peripherals Limited Been A Good Investment?

Worth Peripherals Limited has generated a total shareholder return of 31% 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.

To Conclude...

Worth Peripherals pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Worth Peripherals that investors should be aware of in a dynamic business environment.

Switching gears from Worth Peripherals, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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