We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Xpro India Limited's (NSE:XPROINDIA) CEO For Now

Despite strong share price growth of 493% for Xpro India Limited (NSE:XPROINDIA) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 10 August 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Xpro India

Comparing Xpro India Limited's CEO Compensation With the industry

At the time of writing, our data shows that Xpro India Limited has a market capitalization of ₹3.4b, and reported total annual CEO compensation of ₹15m for the year to March 2021. We note that's an increase of 35% above last year. We note that the salary portion, which stands at ₹10.8m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹6.0m. This suggests that C. Bhaskar is paid more than the median for the industry. Moreover, C. Bhaskar also holds ₹17m worth of Xpro India stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	₹11m	₹11m	74%
Other	₹3.9m		26%
Total Compensation	₹15m	₹11m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. It's interesting to note that Xpro India allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 Xpro India Limited's Growth Numbers

Over the last three years, Xpro India Limited has shrunk its earnings per share by 7.6% per year. In the last year, its revenue is up 5.2%.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Xpro India Limited Been A Good Investment?

Most shareholders would probably be pleased with Xpro India Limited for providing a total return of 493% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Xpro India you should be aware of, and 1 of them is a bit concerning.

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.

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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.
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