How Does DCB Bank's (NSE:DCBBANK) CEO Pay Compare With Company Performance?

This article will reflect on the compensation paid to Murali Natrajan who has served as CEO of DCB Bank Limited (NSE:DCBBANK) since 2009. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for DCB Bank.

View our latest analysis for DCB Bank

Comparing DCB Bank Limited's CEO Compensation With the industry

According to our data, DCB Bank Limited has a market capitalization of ₹36b, and paid its CEO total annual compensation worth ₹55m over the year to March 2020. We note that's an increase of 11% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹24m.

On examining similar-sized companies in the industry with market capitalizations between ₹15b and ₹58b, we discovered that the median CEO total compensation of that group was ₹43m. So it looks like DCB Bank compensates Murali Natrajan in line with the median for the industry. Furthermore, Murali Natrajan directly owns ₹244m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. In DCB Bank's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

DCB Bank Limited's Growth

Over the past three years, DCB Bank Limited has seen its earnings per share (EPS) grow by 11% per year. In the last year, its revenue is down 12%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 DCB Bank Limited Been A Good Investment?

Given the total shareholder loss of 28% over three years, many shareholders in DCB Bank Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, DCB Bank Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. Overall, we wouldn't say Murali is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for DCB Bank that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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