Increases to Hinduja Global Solutions Limited's (NSE:HGS) CEO Compensation Might Cool off for now

The share price of Hinduja Global Solutions Limited (NSE:HGS) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 28 September 2022 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Hinduja Global Solutions

How Does Total Compensation For Partha DeSarkar Compare With Other Companies In The Industry?

Our data indicates that Hinduja Global Solutions Limited has a market capitalization of ₹57b, and total annual CEO compensation was reported as ₹233m for the year to March 2022. That's a notable increase of 34% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹29m.

On examining similar-sized companies in the industry with market capitalizations between ₹32b and ₹128b, we discovered that the median CEO total compensation of that group was ₹22m. Accordingly, our analysis reveals that Hinduja Global Solutions Limited pays Partha DeSarkar north of the industry median. Moreover, Partha DeSarkar also holds ₹138m worth of Hinduja Global Solutions stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹29m	₹29m	13%
Other	₹204m	₹145m	87%
Total Compensation	₹233m	₹173m	100%

Talking in terms of the industry, salary represented approximately 97% of total compensation out of all the companies we analyzed, while other remuneration made up 3% of the pie. 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.

Hinduja Global Solutions Limited's Growth

Over the last three years, Hinduja Global Solutions Limited has shrunk its earnings per share by 27% per year. Its revenue is down 43% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. 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 Hinduja Global Solutions Limited Been A Good Investment?

Boasting a total shareholder return of 417% over three years, Hinduja Global Solutions Limited has done well by shareholders. 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...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Hinduja Global Solutions (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Hinduja Global Solutions, 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.