We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Vindhya Telelinks Limited's (NSE:VINDHYATEL) CEO For Now

The share price of Vindhya Telelinks Limited (NSE:VINDHYATEL) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 23 September 2022. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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 Vindhya Telelinks

How Does Total Compensation For Yashwant Lodha Compare With Other Companies In The Industry?

At the time of writing, our data shows that Vindhya Telelinks Limited has a market capitalization of ₹15b, and reported total annual CEO compensation of ₹24m for the year to March 2022. That's just a smallish increase of 7.6% on last year. In particular, the salary of ₹19.4m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from ₹8.0b to ₹32b, we found that the median CEO total compensation was ₹12m. This suggests that Yashwant Lodha is paid more than the median for the industry.

Component	2022	2021	Proportion (2022)
Salary	₹19m	₹18m	81%
Other	₹4.4m	₹4.3m	19%
Total Compensation	₹24m	₹22m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Vindhya Telelinks is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Vindhya Telelinks Limited's Growth

Vindhya Telelinks Limited has reduced its earnings per share by 17% a year over the last three years. It saw its revenue drop 17% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Vindhya Telelinks Limited Been A Good Investment?

Vindhya Telelinks Limited has served shareholders reasonably well, with a total return of 27% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these 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 pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Vindhya Telelinks (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Important note: Vindhya Telelinks 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.