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

Key Insights

• DCM Shriram will host its Annual General Meeting on 12th of August
• CEO Ajay Shriram's total compensation includes salary of ₹43.9m
• Total compensation is 111% above industry average
• DCM Shriram's EPS declined by 20% over the past three years while total shareholder return over the past three years was 39%

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DCM Shriram Limited (NSE:DCMSHRIRAM) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 12th of August may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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.

View our latest analysis for DCM Shriram

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

Our data indicates that DCM Shriram Limited has a market capitalization of ₹221b, and total annual CEO compensation was reported as ₹164m for the year to March 2025. That's a notable increase of 14% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹44m.

For comparison, other companies in the Indian Chemicals industry with market capitalizations ranging between ₹176b and ₹562b had a median total CEO compensation of ₹78m. This suggests that Ajay Shriram is paid more than the median for the industry. Furthermore, Ajay Shriram directly owns ₹2.0b worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. In DCM Shriram's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

DCM Shriram Limited's Growth

DCM Shriram Limited has reduced its earnings per share by 20% a year over the last three years. It achieved revenue growth of 9.6% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 DCM Shriram Limited Been A Good Investment?

Boasting a total shareholder return of 39% 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...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for DCM Shriram (1 is a bit unpleasant!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.