Our Take On DCM Shriram's (NSE:DCMSHRIRAM) CEO Salary

The CEO of DCM Shriram Limited (NSE:DCMSHRIRAM) is Ajay Shriram, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for DCM Shriram.

See our latest analysis for DCM Shriram

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

At the time of writing, our data shows that DCM Shriram Limited has a market capitalization of ₹59b, and reported total annual CEO compensation of ₹90m for the year to March 2020. That's a slight decrease of 7.5% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹26m.

On comparing similar companies from the same industry with market caps ranging from ₹29b to ₹118b, we found that the median CEO total compensation was ₹28m. This suggests that Ajay Shriram is paid more than the median for the industry. What's more, Ajay Shriram holds ₹545m 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 represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. DCM Shriram sets aside a smaller share of compensation for salary, in comparison to the overall 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

Over the last three years, DCM Shriram Limited has shrunk its earnings per share by 5.6% per year. In the last year, its revenue is up 5.4%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 DCM Shriram Limited Been A Good Investment?

With a three year total loss of 28% for the shareholders, DCM Shriram Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, DCM Shriram Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for DCM Shriram that investors should look into moving forward.

Switching gears from DCM Shriram, 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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