We Think Some Shareholders May Hesitate To Increase Oricon Enterprises Limited's (NSE:ORICONENT) CEO Compensation

Key Insights

• Oricon Enterprises will host its Annual General Meeting on 26th of September
• CEO Adarsh Somani's total compensation includes salary of ₹28.7m
• The overall pay is 1,469% above the industry average
• Oricon Enterprises' EPS declined by 86% over the past three years while total shareholder return over the past three years was 24%

Despite positive share price growth of 24% for Oricon Enterprises Limited (NSE:ORICONENT) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 26th of September. 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.

View our latest analysis for Oricon Enterprises

Comparing Oricon Enterprises Limited's CEO Compensation With The Industry

According to our data, Oricon Enterprises Limited has a market capitalization of ₹5.9b, and paid its CEO total annual compensation worth ₹29m over the year to March 2024. We note that's an increase of 24% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹29m.

In comparison with other companies in the India Shipping industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹1.8m. Hence, we can conclude that Adarsh Somani is remunerated higher than the industry median. Moreover, Adarsh Somani also holds ₹230m worth of Oricon Enterprises stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹29m	₹23m	100%
Other	-	-	-
Total Compensation	₹29m	₹23m	100%

On an industry level, around 93% of total compensation represents salary and 7% is other remuneration. Speaking on a company level, Oricon Enterprises prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Oricon Enterprises Limited's Growth Numbers

Over the last three years, Oricon Enterprises Limited has shrunk its earnings per share by 86% per year. Its revenue is down 73% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Oricon Enterprises Limited Been A Good Investment?

Oricon Enterprises Limited has served shareholders reasonably well, with a total return of 24% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Oricon Enterprises pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Oricon Enterprises (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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.