This Is Why Gujarat Industries Power Company Limited's (NSE:GIPCL) CEO Compensation Looks Appropriate

Key Insights

• Gujarat Industries Power's Annual General Meeting to take place on 20th of September
• CEO Vatsala Vasudeva's total compensation includes salary of ₹4.07m
• The overall pay is comparable to the industry average
• Over the past three years, Gujarat Industries Power's EPS grew by 9.5% and over the past three years, the total shareholder return was 201%

CEO Vatsala Vasudeva has done a decent job of delivering relatively good performance at Gujarat Industries Power Company Limited (NSE:GIPCL) recently. As shareholders go into the upcoming AGM on 20th of September, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Gujarat Industries Power

How Does Total Compensation For Vatsala Vasudeva Compare With Other Companies In The Industry?

Our data indicates that Gujarat Industries Power Company Limited has a market capitalization of ₹35b, and total annual CEO compensation was reported as ₹4.6m for the year to March 2024. That's a fairly small increase of 5.1% over the previous year. We note that the salary portion, which stands at ₹4.07m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Renewable Energy industry with market capitalizations ranging from ₹17b to ₹67b, the reported median CEO total compensation was ₹6.0m. From this we gather that Vatsala Vasudeva is paid around the median for CEOs in the industry.

Component	2024	2023	Proportion (2024)
Salary	₹4.1m	₹3.7m	89%
Other	₹500k	₹600k	11%
Total Compensation	₹4.6m	₹4.3m	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Our data reveals that Gujarat Industries Power allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Gujarat Industries Power Company Limited's Growth Numbers

Gujarat Industries Power Company Limited's earnings per share (EPS) grew 9.5% per year over the last three years. In the last year, its revenue is down 4.9%.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Gujarat Industries Power Company Limited Been A Good Investment?

Most shareholders would probably be pleased with Gujarat Industries Power Company Limited for providing a total return of 201% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Gujarat Industries Power that you should be aware of before investing.

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.