We Think Shareholders May Want To Consider A Review Of Jain Irrigation Systems Limited's (NSE:JISLJALEQS) CEO Compensation Package

The results at Jain Irrigation Systems Limited (NSE:JISLJALEQS) have been quite disappointing recently and CEO Anil Jain bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29 September 2021. 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Jain Irrigation Systems

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

At the time of writing, our data shows that Jain Irrigation Systems Limited has a market capitalization of ₹22b, and reported total annual CEO compensation of ₹31m for the year to March 2021. That's a notable decrease of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹15m.

For comparison, other companies in the same industry with market capitalizations ranging between ₹7.4b and ₹30b had a median total CEO compensation of ₹14m. Accordingly, our analysis reveals that Jain Irrigation Systems Limited pays Anil Jain north of the industry median. What's more, Anil Jain holds ₹32m 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%

On an industry level, around 92% of total compensation represents salary and 8% is other remuneration. It's interesting to note that Jain Irrigation Systems allocates a smaller portion of compensation to salary 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.

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. It achieved revenue growth of 6.9% over the last year.

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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more 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 -51% 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, the board will get the chance to explain the steps it plans to take to improve business performance.

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 Jain Irrigation Systems (1 is a bit concerning!) that you should be aware of before investing here.

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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