Here's Why Shareholders May Want To Be Cautious With Increasing Hinduja Global Solutions Limited's (NSE:HGS) CEO Pay Packet

Under the guidance of CEO Partha DeSarkar, Hinduja Global Solutions Limited (NSE:HGS) has performed reasonably well recently. As shareholders go into the upcoming AGM on 23 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 will still be cautious of paying the CEO excessively.

View our latest analysis for Hinduja Global Solutions

Comparing Hinduja Global Solutions Limited's CEO Compensation With the industry

According to our data, Hinduja Global Solutions Limited has a market capitalization of ₹60b, and paid its CEO total annual compensation worth ₹173m over the year to March 2021. That's a notable increase of 49% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹29m.

For comparison, other companies in the same industry with market capitalizations ranging between ₹29b and ₹118b had a median total CEO compensation of ₹44m. Hence, we can conclude that Partha DeSarkar is remunerated higher than the industry median. Furthermore, Partha DeSarkar directly owns ₹145m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹29m	₹26m	16%
Other	₹145m	₹90m	84%
Total Compensation	₹173m	₹116m	100%

On an industry level, around 99% of total compensation represents salary and 1% is other remuneration. Hinduja Global Solutions sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Hinduja Global Solutions Limited's Growth Numbers

Over the past three years, Hinduja Global Solutions Limited has seen its earnings per share (EPS) grow by 29% per year. Its revenue is up 18% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hinduja Global Solutions Limited Been A Good Investment?

We think that the total shareholder return of 291%, over three years, would leave most Hinduja Global Solutions Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Hinduja Global Solutions that investors should think about before committing capital to this stock.

Important note: Hinduja Global Solutions 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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