Most Shareholders Will Probably Find That The CEO Compensation For JMC Projects (India) Limited (NSE:JMCPROJECT) Is Reasonable

Despite positive share price growth of 9.4% for JMC Projects (India) Limited (NSE:JMCPROJECT) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 14 July 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for JMC Projects (India)

How Does Total Compensation For Shailendra Tripathi Compare With Other Companies In The Industry?

At the time of writing, our data shows that JMC Projects (India) Limited has a market capitalization of ₹21b, and reported total annual CEO compensation of ₹34m for the year to March 2021. That's mostly flat as compared to the prior year's compensation. We note that the salary of ₹19.8m makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from ₹7.5b to ₹30b, the reported median CEO total compensation was ₹30m. From this we gather that Shailendra Tripathi is paid around the median for CEOs in the industry.

Component	2021	2020	Proportion (2021)
Salary	₹20m	₹20m	58%
Other	₹14m	₹14m	42%
Total Compensation	₹34m	₹34m	100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. JMC Projects (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.

JMC Projects (India) Limited's Growth

Over the last three years, JMC Projects (India) Limited has shrunk its earnings per share by 86% per year. In the last year, its revenue changed by just 0.6%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet 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 JMC Projects (India) Limited Been A Good Investment?

With a total shareholder return of 9.4% over three years, JMC Projects (India) Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which can't be ignored) in JMC Projects (India) we think you should know about.

Important note: JMC Projects (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.

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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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