Here's Why Shareholders Should Examine Linc Pen & Plastics Limited's (NSE:LINCPEN) CEO Compensation Package More Closely

Linc Pen & Plastics Limited (NSE:LINCPEN) has not performed well recently and CEO Deepak Jalan will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15 September 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Linc Pen & Plastics

Comparing Linc Pen & Plastics Limited's CEO Compensation With the industry

Our data indicates that Linc Pen & Plastics Limited has a market capitalization of ₹3.3b, and total annual CEO compensation was reported as ₹6.2m for the year to March 2021. That's a notable decrease of 51% on last year. In particular, the salary of ₹5.50m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹2.0m. This suggests that Deepak Jalan is paid more than the median for the industry. Furthermore, Deepak Jalan directly owns ₹515m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹5.5m	₹9.0m	89%
Other	₹657k	₹3.5m	11%
Total Compensation	₹6.2m	₹12m	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. Linc Pen & Plastics sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Linc Pen & Plastics Limited's Growth Numbers

Linc Pen & Plastics Limited has reduced its earnings per share by 29% a year over the last three years. Its revenue is down 13% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Linc Pen & Plastics Limited Been A Good Investment?

Few Linc Pen & Plastics Limited shareholders would feel satisfied with the return of -36% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Linc Pen & Plastics (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Linc Pen & Plastics, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

When trading Linc Pen & Plastics 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.