It's Unlikely That Deccan Cements Limited's (NSE:DECCANCE) CEO Will See A Huge Pay Rise This Year

Key Insights

• Deccan Cements will host its Annual General Meeting on 22nd of September
• Total pay for CEO Penmetcha Parvathi includes ₹13.3m salary
• The overall pay is 805% above the industry average
• Deccan Cements' total shareholder return over the past three years was 91% while its EPS was down 10% over the past three years

Despite strong share price growth of 91% for Deccan Cements Limited (NSE:DECCANCE) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 22nd of September. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Deccan Cements

Comparing Deccan Cements Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Deccan Cements Limited has a market capitalization of ₹7.7b, and reported total annual CEO compensation of ₹32m for the year to March 2023. That's a notable decrease of 13% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹13m.

In comparison with other companies in the Indian Basic Materials industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹3.6m. Accordingly, our analysis reveals that Deccan Cements Limited pays Penmetcha Parvathi north of the industry median. Moreover, Penmetcha Parvathi also holds ₹33m worth of Deccan Cements stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹13m	₹9.2m	41%
Other	₹19m	₹28m	59%
Total Compensation	₹32m	₹37m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. In Deccan Cements' 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.

A Look at Deccan Cements Limited's Growth Numbers

Over the last three years, Deccan Cements Limited has shrunk its earnings per share by 10% per year. In the last year, its revenue is up 2.4%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Deccan Cements Limited Been A Good Investment?

Most shareholders would probably be pleased with Deccan Cements Limited for providing a total return of 91% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Deccan Cements that investors should be aware of in a dynamic business environment.

Important note: Deccan Cements is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.