How Should Investors Feel About DCM Limited's (NSE:DCM) CEO Pay?

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Vinay Ram is the CEO of DCM Limited (NSE:DCM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

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View our latest analysis for DCM

How Does Vinay Ram’s Compensation Compare With Similar Sized Companies?

According to our data, DCM Limited has a market capitalization of ₹1.1b, and pays its CEO total annual compensation worth ₹15m. (This is based on the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at ₹6.7m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.3m.

Thus we can conclude that Vinay Ram receives more in total compensation than the median of a group of companies in the same market, and of similar size to DCM Limited. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at DCM, below.

NSEI:DCM CEO Compensation, May 16th 2019

Is DCM Limited Growing?

Over the last three years DCM Limited has shrunk its earnings per share by an average of 62% per year (measured with a line of best fit). In the last year, its revenue is up 10%.

Few shareholders would be pleased to read that earnings per share are lower over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. 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, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has DCM Limited Been A Good Investment?

Since shareholders would have lost about 42% over three years, some DCM Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at DCM Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if DCM insiders are buying or selling shares.

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We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.