We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Albert David Limited's (NSE:ALBERTDAVD) CEO For Now

Shareholders of Albert David Limited (NSE:ALBERTDAVD) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 14 September 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Albert David

Comparing Albert David Limited's CEO Compensation With the industry

According to our data, Albert David Limited has a market capitalization of ₹3.4b, and paid its CEO total annual compensation worth ₹26m over the year to March 2021. We note that's an increase of 18% above last year. Notably, the salary which is ₹24.0m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.0m. Accordingly, our analysis reveals that Albert David Limited pays Tarminder Parmar north of the industry median.

Component	2021	2020	Proportion (2021)
Salary	₹24m	₹21m	92%
Other	₹2.2m	₹1.2m	8%
Total Compensation	₹26m	₹22m	100%

On an industry level, roughly 93% of total compensation represents salary and 7% is other remuneration. Although there is a difference in how total compensation is set, Albert David more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Albert David Limited's Growth

Albert David Limited's earnings per share (EPS) grew 5.4% per year over the last three years. It saw its revenue drop 2.9% over the last year.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Albert David Limited Been A Good Investment?

With a three year total loss of 22% for the shareholders, Albert David Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Albert David that investors should be aware of in a dynamic business environment.

Important note: Albert David 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.
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