Increases to CEO Compensation Might Be Put On Hold For Now at Trejhara Solutions Limited (NSE:TREJHARA)

Key Insights

• Trejhara Solutions will host its Annual General Meeting on 29th of September
• Total pay for CEO Amit Sheth includes ₹4.38m salary
• The overall pay is 542% above the industry average
• Trejhara Solutions' total shareholder return over the past three years was 551% while its EPS was down 134% over the past three years

Despite strong share price growth of 551% for Trejhara Solutions Limited (NSE:TREJHARA) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29th of September. 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Trejhara Solutions

How Does Total Compensation For Amit Sheth Compare With Other Companies In The Industry?

According to our data, Trejhara Solutions Limited has a market capitalization of ₹1.6b, and paid its CEO total annual compensation worth ₹12m over the year to March 2023. We note that's an increase of 67% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹4.4m.

For comparison, other companies in the Indian IT industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹1.9m. Hence, we can conclude that Amit Sheth is remunerated higher than the industry median. Moreover, Amit Sheth also holds ₹90m worth of Trejhara Solutions stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹4.4m	₹2.6m	36%
Other	₹7.9m	₹4.8m	64%
Total Compensation	₹12m	₹7.4m	100%

On an industry level, roughly 99% of total compensation represents salary and 1% is other remuneration. Trejhara 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 Trejhara Solutions Limited's Growth Numbers

Over the last three years, Trejhara Solutions Limited has shrunk its earnings per share by 134% per year. It achieved revenue growth of 13% over the last year.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Trejhara Solutions Limited Been A Good Investment?

Most shareholders would probably be pleased with Trejhara Solutions Limited for providing a total return of 551% over three years. 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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Trejhara Solutions (1 can't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.