Why We Think V-Mart Retail Limited's (NSE:VMART) CEO Compensation Is Not Excessive At All

The performance at V-Mart Retail Limited (NSE:VMART) has been rather lacklustre of late and shareholders may be wondering what CEO Lalit Agarwal is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 25 August 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for V-Mart Retail

How Does Total Compensation For Lalit Agarwal Compare With Other Companies In The Industry?

Our data indicates that V-Mart Retail Limited has a market capitalization of ₹73b, and total annual CEO compensation was reported as ₹15m for the year to March 2021. That's a notable decrease of 38% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹6.4m.

In comparison with other companies in the industry with market capitalizations ranging from ₹30b to ₹119b, the reported median CEO total compensation was ₹53m. In other words, V-Mart Retail pays its CEO lower than the industry median. What's more, Lalit Agarwal holds ₹4.7b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹6.4m	₹8.5m	42%
Other	₹9.0m	₹16m	58%
Total Compensation	₹15m	₹25m	100%

On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. V-Mart Retail pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

V-Mart Retail Limited's Growth

Over the last three years, V-Mart Retail Limited has shrunk its earnings per share by 85% per year. In the last year, its revenue is down 8.7%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 V-Mart Retail Limited Been A Good Investment?

V-Mart Retail Limited has served shareholders reasonably well, with a total return of 23% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Shareholder returns while positive, need to be looked at along with earnings, which have failed to grow and this could mean that the current momentum may not continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for V-Mart Retail (1 is significant!) that you should be aware of before investing here.

Switching gears from V-Mart Retail, 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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