This Is The Reason Why We Think HFCL Limited's (NSE:HFCL) CEO Deserves A Bump Up To Their Compensation

Key Insights

• HFCL to hold its Annual General Meeting on 30th of September
• Total pay for CEO Mahendra Nahata includes ₹50.0m salary
• Total compensation is 34% below industry average
• Over the past three years, HFCL's EPS grew by 28% and over the past three years, the total shareholder return was 390%

The solid performance at HFCL Limited (NSE:HFCL) has been impressive and shareholders will probably be pleased to know that CEO Mahendra Nahata has delivered. At the upcoming AGM on 30th of September, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

Check out our latest analysis for HFCL

How Does Total Compensation For Mahendra Nahata Compare With Other Companies In The Industry?

At the time of writing, our data shows that HFCL Limited has a market capitalization of ₹103b, and reported total annual CEO compensation of ₹70m for the year to March 2023. This means that the compensation hasn't changed much from last year. Notably, the salary which is ₹50.0m, represents most of the total compensation being paid.

For comparison, other companies in the India Telecom industry with market capitalizations ranging between ₹83b and ₹266b had a median total CEO compensation of ₹106m. This suggests that Mahendra Nahata is paid below the industry median. Furthermore, Mahendra Nahata directly owns ₹288m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹50m	₹50m	71%
Other	₹20m	₹20m	29%
Total Compensation	₹70m	₹70m	100%

On an industry level, roughly 71% of total compensation represents salary and 29% is other remuneration. Our data reveals that HFCL allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at HFCL Limited's Growth Numbers

HFCL Limited has seen its earnings per share (EPS) increase by 28% a year over the past three years. Its revenue is up 2.5% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 HFCL Limited Been A Good Investment?

Boasting a total shareholder return of 390% over three years, HFCL Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for HFCL that investors should be aware of in a dynamic business environment.

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.