Here's Why Shareholders Should Examine Jain Irrigation Systems Limited's (NSE:JISLDVREQS) CEO Compensation Package More Closely

Jain Irrigation Systems Limited (NSE:JISLDVREQS) has not performed well recently and CEO Anil Jain will probably need to up their game. At the upcoming AGM on 29 September 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Jain Irrigation Systems

Comparing Jain Irrigation Systems Limited's CEO Compensation With the industry

According to our data, Jain Irrigation Systems Limited has a market capitalization of ₹22b, and paid its CEO total annual compensation worth ₹31m over the year to March 2021. Notably, that's a decrease of 14% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹15m.

On comparing similar companies from the same industry with market caps ranging from ₹7.4b to ₹30b, we found that the median CEO total compensation was ₹14m. Accordingly, our analysis reveals that Jain Irrigation Systems Limited pays Anil Jain north of the industry median. What's more, Anil Jain holds ₹20m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹15m	₹16m	50%
Other	₹15m	₹19m	50%
Total Compensation	₹31m	₹35m	100%

Talking in terms of the industry, salary represented approximately 92% of total compensation out of all the companies we analyzed, while other remuneration made up 8% of the pie. Jain Irrigation Systems sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Jain Irrigation Systems Limited's Growth Numbers

Jain Irrigation Systems Limited has reduced its earnings per share by 87% a year over the last three years. In the last year, its revenue is up 6.9%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Jain Irrigation Systems Limited Been A Good Investment?

Few Jain Irrigation Systems Limited shareholders would feel satisfied with the return of -54% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Jain Irrigation Systems you should be aware of, and 1 of them makes us a bit uncomfortable.

Important note: Jain Irrigation Systems 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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