Here's Why Shareholders May Want To Be Cautious With Increasing Solex Energy Limited's (NSE:SOLEX) CEO Pay Packet

Key Insights

• Solex Energy will host its Annual General Meeting on 29th of September
• Total pay for CEO Chetan Shah includes ₹4.50m salary
• Total compensation is 63% above industry average
• Over the past three years, Solex Energy's EPS fell by 28% and over the past three years, the total shareholder return was 2,078%

CEO Chetan Shah has done a decent job of delivering relatively good performance at Solex Energy Limited (NSE:SOLEX) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 29th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Solex Energy

How Does Total Compensation For Chetan Shah Compare With Other Companies In The Industry?

Our data indicates that Solex Energy Limited has a market capitalization of ₹4.7b, and total annual CEO compensation was reported as ₹6.8m for the year to March 2023. That's a notable increase of 41% on last year. We note that the salary portion, which stands at ₹4.50m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the India Semiconductor industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹4.1m. Accordingly, our analysis reveals that Solex Energy Limited pays Chetan Shah north of the industry median. Furthermore, Chetan Shah directly owns ₹363m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹4.5m	-	67%
Other	₹2.3m	₹4.8m	33%
Total Compensation	₹6.8m	₹4.8m	100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Solex Energy pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Solex Energy Limited's Growth

Over the last three years, Solex Energy Limited has shrunk its earnings per share by 28% per year. Its revenue is up 125% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. 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 Solex Energy Limited Been A Good Investment?

We think that the total shareholder return of 2,078%, over three years, would leave most Solex Energy Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

The overall company performance has been commendable, however there are still areas for improvement. 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.

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 5 warning signs for Solex Energy (3 are significant!) that you should be aware of before investing here.

Important note: Solex Energy 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.