Shareholders will be pleased by the impressive results for Dynamatic Technologies Limited (NSE:DYNAMATECH) recently and CEO Udayant Malhoutra has played a key role. At the upcoming AGM on 16 September 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.
How Does Total Compensation For Udayant Malhoutra Compare With Other Companies In The Industry?
At the time of writing, our data shows that Dynamatic Technologies Limited has a market capitalization of ₹18b, and reported total annual CEO compensation of ₹7.9m for the year to March 2021. That's mostly flat as compared to the prior year's compensation. Notably, the salary of ₹7.9m is the entirety of the CEO compensation.
For comparison, other companies in the same industry with market capitalizations ranging between ₹7.4b and ₹30b had a median total CEO compensation of ₹20m. In other words, Dynamatic Technologies pays its CEO lower than the industry median. Moreover, Udayant Malhoutra also holds ₹1.5b worth of Dynamatic Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 73% of total compensation represents salary and 27% is other remuneration. At the company level, Dynamatic Technologies pays Udayant Malhoutra solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Dynamatic Technologies Limited's Growth Numbers
Over the past three years, Dynamatic Technologies Limited has seen its earnings per share (EPS) grow by 11% per year. Its revenue is up 10% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Dynamatic Technologies Limited Been A Good Investment?
We think that the total shareholder return of 64%, over three years, would leave most Dynamatic Technologies Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Dynamatic Technologies rewards its CEO solely through a salary, ignoring non-salary benefits completely. Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Dynamatic Technologies (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Important note: Dynamatic Technologies is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
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