Shareholders Will Probably Hold Off On Increasing Dalmia Bharat Limited's (NSE:DALBHARAT) CEO Compensation For The Time Being

Key Insights

• Dalmia Bharat to hold its Annual General Meeting on 28th of June
• CEO Puneet Dalmia's total compensation includes salary of ₹218.4m
• The overall pay is 167% above the industry average
• Dalmia Bharat's total shareholder return over the past three years was 1.1% while its EPS was down 11% over the past three years

The anaemic share price growth at Dalmia Bharat Limited (NSE:DALBHARAT) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. Some of these issues will occupy shareholders' minds as the AGM rolls around on 28th of June. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Dalmia Bharat

How Does Total Compensation For Puneet Dalmia Compare With Other Companies In The Industry?

According to our data, Dalmia Bharat Limited has a market capitalization of ₹342b, and paid its CEO total annual compensation worth ₹233m over the year to March 2024. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at ₹218.4m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Indian Basic Materials industry with market caps ranging from ₹167b to ₹535b, we found that the median CEO total compensation was ₹87m. This suggests that Puneet Dalmia is paid more than the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	₹218m	₹207m	94%
Other	₹15m	₹27m	6%
Total Compensation	₹233m	₹234m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. There isn't a significant difference between Dalmia Bharat and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Dalmia Bharat Limited's Growth Numbers

Dalmia Bharat Limited has reduced its earnings per share by 11% a year over the last three years. It achieved revenue growth of 8.4% 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Dalmia Bharat Limited Been A Good Investment?

Dalmia Bharat Limited has not done too badly by shareholders, with a total return of 1.1%, over three years. It would be nice to see that metric improve in the future. 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...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Dalmia Bharat that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com