Shareholders Wouldn’t Object to Agarwal Industrial Corporation Limited (NSE:AGARIND) CEO Pay and Here’s Why

We were quite impressed with the performance of Agarwal Industrial Corporation Limited (NSE:AGARIND) recently and CEO Jaiprakash Agarwal deserves a mention for his role. As the next General Meeting on September 30, 2022 approaches, shareholders would keep this in mind. The focus will likely be on the company’s future strategy, with shareholders voting on resolutions such as executive compensation and other issues. In light of the excellent performance, we discuss why we believe the CEO compensation is not excessive.

See our latest analysis for Agarwal Industrial

How does Jaiprakash Agarwal’s total compensation compare to other companies in the industry?

According to our data, Agarwal Industrial Corporation Limited has a market capitalization of ₹8.5 billion and paid its CEO a total annual compensation worth ₹6.0 million in the year till March 2022. There was no change in compensation compared to last year. Notably, the salary of ₹6.0 million is the entire remuneration of the CEO.

Comparing similarly sized companies in the industry with market caps below ₹16 billion, we found that the median CEO total compensation was ₹7.0 million. We infer that Jaiprakash Agarwal is paid around the industry CEO median. Moreover, Jaiprakash Agarwal owns ₹624 million worth of shares in the company in his own name, indicating that he has a lot of skin in the game.

At the industry level, about 86% of total compensation is salary and 14% is other compensation. At the corporate level, Agarwal Industrial pays Jaiprakash Agarwal only through salary, preferring to follow a conventional route. If salary dominates total compensation, this suggests that CEO compensation leans less towards the variable component, which is usually tied to performance.

A look at the growth figures of Agarwal Industrial Corporation Limited

Over the past three years, Agarwal Industrial Corporation Limited has seen its earnings per share (EPS) grow by 44% annually. It has achieved 52% revenue growth over the past year.

Shareholders would be happy to know that the company has improved over the past few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. We don’t have analyst forecasts, but you can better understand its growth by viewing this more detailed historical chart of earnings, revenue and cash flow.

Was Agarwal Industrial Corporation Limited a good investment?

We believe the three-year total shareholder return of 414% would leave most shareholders of Agarwal Industrial Corporation Limited smiling. As a result, some may think the CEO should be paid more than is normal for companies of a similar size.

In summary…

Agarwal Industrial rewards its CEO only with salary, completely ignoring non-salary benefits. The strong performance of the company might have made most shareholders happy, perhaps making CEO compensation the least of the topics to be discussed at the general meeting. However, investors will have the opportunity to engage in key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is a crucial aspect to watch, but investors should also keep an eye out for other issues related to company performance. We did our research and spotted 2 warning signs for Agarwal Industrial that investors should consider moving forward.

Arguably, the quality of the company is far more important than CEO compensation levels. So watch this free list of attractive companies that have a high return on equity and low debt.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.