Should Shareholders Reconsider Dynemic Products Limited's (NSE:DYNPRO) CEO Compensation Package?

Key Insights

• Dynemic Products to hold its Annual General Meeting on 28th of September
• Salary of ₹7.89m is part of CEO Bhagwandas Patel's total remuneration
• The total compensation is 77% higher than the average for the industry
• Dynemic Products' three-year loss to shareholders was 25% while its EPS was down 48% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Dynemic Products Limited (NSE:DYNPRO) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28th of September. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Dynemic Products

How Does Total Compensation For Bhagwandas Patel Compare With Other Companies In The Industry?

At the time of writing, our data shows that Dynemic Products Limited has a market capitalization of ₹4.8b, and reported total annual CEO compensation of ₹9.9m for the year to March 2024. We note that's an increase of 16% above last year. We note that the salary portion, which stands at ₹7.89m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Indian Chemicals industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹5.6m. Hence, we can conclude that Bhagwandas Patel is remunerated higher than the industry median. Moreover, Bhagwandas Patel also holds ₹538m worth of Dynemic Products stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹7.9m	₹7.9m	79%
Other	₹2.0m	₹657k	21%
Total Compensation	₹9.9m	₹8.5m	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. In Dynemic Products' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Dynemic Products Limited's Growth Numbers

Dynemic Products Limited has reduced its earnings per share by 48% a year over the last three years. In the last year, its revenue changed by just 1.0%.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. 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 Dynemic Products Limited Been A Good Investment?

Since shareholders would have lost about 25% over three years, some Dynemic Products Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for Dynemic Products you should be aware of, and 2 of them are significant.

Important note: Dynemic Products 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.