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

Key Insights

• Nelco's Annual General Meeting to take place on 24th of June
• CEO Pradip Nath's total compensation includes salary of ₹23.7m
• The total compensation is 355% higher than the average for the industry
• Nelco's total shareholder return over the past three years was 90% while its EPS was down 16% over the past three years

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The share price of Nelco Limited (NSE:NELCO) 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 24th of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. 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.

See our latest analysis for Nelco

How Does Total Compensation For Pradip Nath Compare With Other Companies In The Industry?

According to our data, Nelco Limited has a market capitalization of ₹25b, and paid its CEO total annual compensation worth ₹42m over the year to March 2025. Notably, that's an increase of 13% over the year before. In particular, the salary of ₹23.7m, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the India Communications industry with market capitalizations ranging between ₹8.6b and ₹34b had a median total CEO compensation of ₹9.2m. Hence, we can conclude that Pradip Nath is remunerated higher than the industry median.

Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. In Nelco's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Nelco Limited's Growth

Over the last three years, Nelco Limited has shrunk its earnings per share by 16% per year. Its revenue is down 4.8% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Nelco Limited Been A Good Investment?

We think that the total shareholder return of 90%, over three years, would leave most Nelco Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. 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.

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 you should be aware of before investing.

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. 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.