What We Learned About Damodar Industries' (NSE:DAMODARIND) CEO Compensation

Ajay Biyani became the CEO of Damodar Industries Limited (NSE:DAMODARIND) in 1998, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Damodar Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Damodar Industries

How Does Total Compensation For Ajay Biyani Compare With Other Companies In The Industry?

Our data indicates that Damodar Industries Limited has a market capitalization of ₹600m, and total annual CEO compensation was reported as ₹6.7m for the year to March 2020. That's just a smallish increase of 7.7% on last year. Notably, the salary of ₹6.7m is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹4.2m. Accordingly, our analysis reveals that Damodar Industries Limited pays Ajay Biyani north of the industry median. What's more, Ajay Biyani holds ₹91m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. Speaking on a company level, Damodar Industries prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Damodar Industries Limited's Growth

Over the last three years, Damodar Industries Limited has shrunk its earnings per share by 83% per year. In the last year, its revenue is down 16%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Damodar Industries Limited Been A Good Investment?

Since shareholders would have lost about 59% over three years, some Damodar Industries Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Damodar Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, Damodar Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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. In our study, we found 4 warning signs for Damodar Industries you should be aware of, and 3 of them can't be ignored.

Switching gears from Damodar Industries, 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.

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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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