Increases to DCM Shriram Limited's (NSE:DCMSHRIRAM) CEO Compensation Might Cool off for now

Under the guidance of CEO Ajay Shriram, DCM Shriram Limited (NSE:DCMSHRIRAM) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 20 July 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for DCM Shriram

Comparing DCM Shriram Limited's CEO Compensation With the industry

Our data indicates that DCM Shriram Limited has a market capitalization of ₹141b, and total annual CEO compensation was reported as ₹96m for the year to March 2021. That's a modest increase of 7.0% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹22m.

On comparing similar companies from the same industry with market caps ranging from ₹75b to ₹239b, we found that the median CEO total compensation was ₹37m. Hence, we can conclude that Ajay Shriram is remunerated higher than the industry median. Moreover, Ajay Shriram also holds ₹1.3b worth of DCM Shriram stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	₹22m	₹26m	23%
Other	₹74m	₹65m	77%
Total Compensation	₹96m	₹90m	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. It's interesting to note that DCM Shriram allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

DCM Shriram Limited's Growth

DCM Shriram Limited has seen its earnings per share (EPS) increase by 1.6% a year over the past three years. In the last year, its revenue is up 7.0%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has DCM Shriram Limited Been A Good Investment?

Boasting a total shareholder return of 173% over three years, DCM Shriram Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

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 3 warning signs for DCM Shriram that you should be aware of before investing.

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. 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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