Should Shareholders Reconsider Dilip Buildcon Limited's (NSE:DBL) CEO Compensation Package?

Key Insights

• Dilip Buildcon's Annual General Meeting to take place on 18th of September
• Total pay for CEO Devendra Jain includes ₹110.0m salary
• Total compensation is 266% above industry average
• Dilip Buildcon's EPS declined by 45% over the past three years while total shareholder loss over the past three years was 13%

Shareholders will probably not be too impressed with the underwhelming results at Dilip Buildcon Limited (NSE:DBL) recently. At the upcoming AGM on 18th of September, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Dilip Buildcon

How Does Total Compensation For Devendra Jain Compare With Other Companies In The Industry?

According to our data, Dilip Buildcon Limited has a market capitalization of ₹48b, and paid its CEO total annual compensation worth ₹110m over the year to March 2023. There was no change in the compensation compared to last year. Notably, the salary of ₹110m is the entirety of the CEO compensation.

In comparison with other companies in the Indian Construction industry with market capitalizations ranging from ₹17b to ₹66b, the reported median CEO total compensation was ₹30m. This suggests that Devendra Jain is paid more than the median for the industry. Moreover, Devendra Jain also holds ₹12b worth of Dilip Buildcon stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹110m	₹110m	100%
Other	-	-	-
Total Compensation	₹110m	₹110m	100%

Speaking on an industry level, nearly 96% of total compensation represents salary, while the remainder of 4% is other remuneration. At the company level, Dilip Buildcon pays Devendra Jain solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Dilip Buildcon Limited's Growth

Over the last three years, Dilip Buildcon Limited has shrunk its earnings per share by 45% per year. In the last year, its revenue is up 6.7%.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Dilip Buildcon Limited Been A Good Investment?

With a three year total loss of 13% for the shareholders, Dilip Buildcon Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Dilip Buildcon rewards its CEO solely through a salary, ignoring non-salary benefits completely. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Dilip Buildcon (1 shouldn't be ignored!) that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.