Shareholders May Not Be So Generous With Nitiraj Engineers Limited's (NSE:NITIRAJ) CEO Compensation And Here's Why

The share price of Nitiraj Engineers Limited (NSE:NITIRAJ) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. The upcoming AGM on 29 September 2022 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 what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Nitiraj Engineers

How Does Total Compensation For Rajesh Bhatwal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Nitiraj Engineers Limited has a market capitalization of ₹797m, and reported total annual CEO compensation of ₹4.3m for the year to March 2022. This means that the compensation hasn't changed much from last year. Notably, the salary which is ₹2.40m, represents a considerable chunk of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below ₹16b, we found that the median total CEO compensation was ₹2.2m. Accordingly, our analysis reveals that Nitiraj Engineers Limited pays Rajesh Bhatwal north of the industry median. Furthermore, Rajesh Bhatwal directly owns ₹341m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. It's interesting to note that Nitiraj Engineers allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Nitiraj Engineers Limited's Growth Numbers

Over the last three years, Nitiraj Engineers Limited has shrunk its earnings per share by 77% per year. It saw its revenue drop 18% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last 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 Nitiraj Engineers Limited Been A Good Investment?

Nitiraj Engineers Limited has generated a total shareholder return of 4.5% 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 lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. 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 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 2 warning signs for Nitiraj Engineers 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.