Why We Think De Nora India Limited's (NSE:DENORA) CEO Compensation Is Not Excessive At All

Performance at De Nora India Limited (NSE:DENORA) has been rather uninspiring recently and shareholders may be wondering how CEO Vinay Chopra plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 23 September 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for De Nora India

Comparing De Nora India Limited's CEO Compensation With the industry

Our data indicates that De Nora India Limited has a market capitalization of ₹1.8b, and total annual CEO compensation was reported as ₹3.8m for the year to March 2021. Notably, that's an increase of 12% over the year before. In particular, the salary of ₹2.83m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹5.7m. That is to say, Vinay Chopra is paid under the industry median.

Component	2021	2020	Proportion (2021)
Salary	₹2.8m	₹2.4m	74%
Other	₹1.0m	₹1.1m	26%
Total Compensation	₹3.8m	₹3.4m	100%

Speaking on an industry level, nearly 98% of total compensation represents salary, while the remainder of 2% is other remuneration. De Nora India pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at De Nora India Limited's Growth Numbers

Over the last three years, De Nora India Limited has shrunk its earnings per share by 5.9% per year. It saw its revenue drop 21% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 De Nora India Limited Been A Good Investment?

De Nora India Limited has generated a total shareholder return of 28% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

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. We've identified 2 warning signs for De Nora India that investors should be aware of in a dynamic business environment.

Important note: De Nora India 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.

When trading De Nora India or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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