Increases to Nelco Limited's (NSE:NELCO) CEO Compensation Might Cool off for now

Under the guidance of CEO Pradip Nath, Nelco Limited (NSE:NELCO) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 22 June 2021. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for Nelco

Comparing Nelco Limited's CEO Compensation With the industry

Our data indicates that Nelco Limited has a market capitalization of ₹6.1b, and total annual CEO compensation was reported as ₹30m for the year to March 2021. We note that's an increase of 10% above last year. Notably, the salary which is ₹17.0m, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹6.0m. Accordingly, our analysis reveals that Nelco Limited pays Pradip Nath north of the industry median.

Component	2021	2020	Proportion (2021)
Salary	₹17m	₹15m	57%
Other	₹13m	₹12m	43%
Total Compensation	₹30m	₹27m	100%

Speaking on an industry level, nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. It's interesting to note that Nelco allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Nelco Limited's Growth Numbers

Over the last three years, Nelco Limited has not seen its earnings per share change much, though there is a slight positive movement. Its revenue is up 2.8% over the last year.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Nelco Limited Been A Good Investment?

Nelco Limited has generated a total shareholder return of 0.8% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Nelco that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. 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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