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

Key Insights

• HFCL to hold its Annual General Meeting on 30th of September
• Salary of ₹50.0m is part of CEO Mahendra Nahata's total remuneration
• The total compensation is 43% higher than the average for the industry
• HFCL's EPS grew by 2.6% over the past three years while total shareholder return over the past three years was 127%

Performance at HFCL Limited (NSE:HFCL) has been reasonably good and CEO Mahendra Nahata has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 30th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for HFCL

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

According to our data, HFCL Limited has a market capitalization of ₹233b, and paid its CEO total annual compensation worth ₹100m over the year to March 2024. We note that's an increase of 43% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹50m.

In comparison with other companies in the India Telecom industry with market capitalizations ranging from ₹167b to ₹535b, the reported median CEO total compensation was ₹70m. This suggests that Mahendra Nahata is paid more than the median for the industry. Furthermore, Mahendra Nahata directly owns ₹642m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹50m	₹50m	50%
Other	₹50m	₹20m	50%
Total Compensation	₹100m	₹70m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. In HFCL's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at HFCL Limited's Growth Numbers

Over the past three years, HFCL Limited has seen its earnings per share (EPS) grow by 2.6% per year. In the last year, its revenue is down 1.3%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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?

We think that the total shareholder return of 127%, over three years, would leave most HFCL Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

So you may want to check if insiders are buying HFCL shares with their own money (free access).

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.