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

Key Insights

• Nelco to hold its Annual General Meeting on 25th of June
• CEO Pradip Nath's total compensation includes salary of ₹20.2m
• Total compensation is 291% above industry average
• Nelco's total shareholder return over the past three years was 215% while its EPS grew by 24% over the past three years

CEO Pradip Nath has done a decent job of delivering relatively good performance at Nelco Limited (NSE:NELCO) 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 25th of June. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View 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 ₹18b, and total annual CEO compensation was reported as ₹37m for the year to March 2024. Notably, that's an increase of 11% over the year before. In particular, the salary of ₹20.2m, makes up a fairly large portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the India Communications industry with market capitalizations between ₹8.3b and ₹33b, we discovered that the median CEO total compensation of that group was ₹9.4m. This suggests that Pradip Nath is paid more than the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	₹20m	₹18m	55%
Other	₹17m	₹15m	45%
Total Compensation	₹37m	₹33m	100%

Talking in terms of the industry, salary represented approximately 84% of total compensation out of all the companies we analyzed, while other remuneration made up 16% of the pie. Nelco sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Nelco Limited's Growth Numbers

Nelco Limited's earnings per share (EPS) grew 24% per year over the last three years. In the last year, its revenue is up 2.2%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Nelco Limited Been A Good Investment?

Boasting a total shareholder return of 215% over three years, Nelco 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...

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. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Nelco that investors should think about before committing capital to this stock.

Important note: Nelco 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com