Should Shareholders Reconsider TVS Electronics Limited's (NSE:TVSELECT) CEO Compensation Package?

The results at TVS Electronics Limited (NSE:TVSELECT) have been quite disappointing recently and CEO Srilalitha Gopal bears some responsibility for this. At the upcoming AGM on 14 August 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for TVS Electronics

How Does Total Compensation For Srilalitha Gopal Compare With Other Companies In The Industry?

At the time of writing, our data shows that TVS Electronics Limited has a market capitalization of ₹3.5b, and reported total annual CEO compensation of ₹8.9m for the year to March 2021. Notably, that's a decrease of 36% over the year before. Notably, the salary of ₹8.9m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹2.9m. Hence, we can conclude that Srilalitha Gopal is remunerated higher than the industry median.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. At the company level, TVS Electronics pays Srilalitha Gopal solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at TVS Electronics Limited's Growth Numbers

TVS Electronics Limited has reduced its earnings per share by 64% a year over the last three years. It saw its revenue drop 13% over the last 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. 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 TVS Electronics Limited Been A Good Investment?

With a total shareholder return of -46% over three years, TVS Electronics Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

TVS Electronics pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which doesn't sit too well with us) in TVS Electronics we think you should know about.

Switching gears from TVS Electronics, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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