We Think Deccan Cements Limited's (NSE:DECCANCE) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Deccan Cements to hold its Annual General Meeting on 20th of September
• Salary of ₹13.8m is part of CEO Penmetcha Parvathi's total remuneration
• The overall pay is 883% above the industry average
• Deccan Cements' three-year loss to shareholders was 10.0% while its EPS was down 41% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Deccan Cements Limited (NSE:DECCANCE) recently. At the upcoming AGM on 20th of September, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Deccan Cements

How Does Total Compensation For Penmetcha Parvathi Compare With Other Companies In The Industry?

Our data indicates that Deccan Cements Limited has a market capitalization of ₹9.0b, and total annual CEO compensation was reported as ₹29m for the year to March 2024. Notably, that's a decrease of 10% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹14m.

For comparison, other companies in the Indian Basic Materials industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹2.9m. Hence, we can conclude that Penmetcha Parvathi is remunerated higher than the industry median. Furthermore, Penmetcha Parvathi directly owns ₹38m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹14m	₹13m	47%
Other	₹15m	₹19m	53%
Total Compensation	₹29m	₹32m	100%

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Deccan Cements sets aside a smaller share of compensation for salary, in comparison to the overall 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 41% per year. Revenue was pretty flat on last year.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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?

Given the total shareholder loss of 10.0% over three years, many shareholders in Deccan Cements Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for Deccan Cements (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.