How Is DCM Shriram's (NSE:DCMSHRIRAM) CEO Compensated?

Ajay Shriram is the CEO of DCM Shriram Limited (NSE:DCMSHRIRAM), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for DCM Shriram.

View our latest analysis for DCM Shriram

Comparing DCM Shriram Limited's CEO Compensation With the industry

According to our data, DCM Shriram Limited has a market capitalization of ₹58b, and paid its CEO total annual compensation worth ₹90m over the year to March 2020. That's a slight decrease of 7.5% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹26m.

For comparison, other companies in the same industry with market capitalizations ranging between ₹29b and ₹118b had a median total CEO compensation of ₹28m. Accordingly, our analysis reveals that DCM Shriram Limited pays Ajay Shriram north of the industry median. Furthermore, Ajay Shriram directly owns ₹532m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 91% of total compensation represents salary and 9.4% is other remuneration. It's interesting to note that DCM Shriram allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

DCM Shriram Limited's Growth

DCM Shriram Limited has reduced its earnings per share by 1.6% a year over the last three years. In the last year, its revenue is up 2.2%.

A lack of EPS improvement is not good to see. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has DCM Shriram Limited Been A Good Investment?

Given the total shareholder loss of 9.3% over three years, many shareholders in DCM Shriram Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, DCM Shriram pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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 3 warning signs for DCM Shriram that investors should think about before committing capital to this 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. 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.
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