Here's Why Shareholders May Want To Be Cautious With Increasing Ajmera Realty & Infra India Limited's (NSE:AJMERA) CEO Pay Packet

Under the guidance of CEO Rajnikant Ajmera, Ajmera Realty & Infra India Limited (NSE:AJMERA) has performed reasonably well recently. As shareholders go into the upcoming AGM on 16 September 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Ajmera Realty & Infra India

How Does Total Compensation For Rajnikant Ajmera Compare With Other Companies In The Industry?

Our data indicates that Ajmera Realty & Infra India Limited has a market capitalization of ₹15b, and total annual CEO compensation was reported as ₹7.8m for the year to March 2021. Notably, that's a decrease of 46% over the year before. In particular, the salary of ₹6.68m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between ₹7.4b and ₹30b, we discovered that the median CEO total compensation of that group was ₹4.4m. This suggests that Rajnikant Ajmera is paid more than the median for the industry.

Component	2021	2020	Proportion (2021)
Salary	₹6.7m	₹13m	86%
Other	₹1.1m	₹1.1m	14%
Total Compensation	₹7.8m	₹14m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. It's interesting to note that Ajmera Realty & Infra 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 Ajmera Realty & Infra India Limited's Growth Numbers

Over the last three years, Ajmera Realty & Infra India Limited has shrunk its earnings per share by 21% per year. In the last year, its revenue is up 53%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Ajmera Realty & Infra India Limited Been A Good Investment?

We think that the total shareholder return of 103%, over three years, would leave most Ajmera Realty & Infra India Limited shareholders smiling. 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.

To Conclude...

Some shareholders will be pleased by the relatively good results, however, the results could still be improved. Until EPS growth picks back up, we think shareholders may find it hard to justify increasing CEO pay given that they are already paid above industry average.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Ajmera Realty & Infra India (2 don't sit too well with us!) that you should be aware of before investing here.

Switching gears from Ajmera Realty & Infra India, 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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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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