Here's Why Shareholders May Want To Be Cautious With Increasing DIC India Limited's (NSE:DICIND) CEO Pay Packet

Key Insights

• DIC India's Annual General Meeting to take place on 22nd of March
• Total pay for CEO Manish Bhatia includes ₹8.10m salary
• The overall pay is 453% above the industry average
• DIC India's total shareholder return over the past three years was 10% while its EPS was down 69% over the past three years

The share price of DIC India Limited (NSE:DICIND) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 22nd of March. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. 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 DIC India

How Does Total Compensation For Manish Bhatia Compare With Other Companies In The Industry?

According to our data, DIC India Limited has a market capitalization of ₹4.0b, and paid its CEO total annual compensation worth ₹33m over the year to December 2023. That's a fairly small increase of 3.1% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹8.1m.

On comparing similar-sized companies in the Indian Chemicals industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹6.0m. Accordingly, our analysis reveals that DIC India Limited pays Manish Bhatia north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	₹8.1m	₹7.6m	24%
Other	₹25m	₹25m	76%
Total Compensation	₹33m	₹32m	100%

On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. DIC India sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

DIC India Limited's Growth

Over the last three years, DIC India Limited has shrunk its earnings per share by 69% per year. In the last year, its revenue is down 5.1%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet 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 DIC India Limited Been A Good Investment?

DIC India Limited has served shareholders reasonably well, with a total return of 10% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is significant) in DIC India we think you should know about.

Important note: DIC India 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.