Udayant Malhoutra has been the CEO of Dynamatic Technologies Limited (NSE:DYNAMATECH) since 1989, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Dynamatic Technologies Limited’s CEO Compensation With the industry
At the time of writing, our data shows that Dynamatic Technologies Limited has a market capitalization of ₹5.7b, and reported total annual CEO compensation of ₹7.9m for the year to March 2020. We note that’s a small decrease of 5.5% on last year. Notably, the salary of ₹7.9m is the entirety of the CEO compensation.
For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹11m. So it looks like Dynamatic Technologies compensates Udayant Malhoutra in line with the median for the industry. Moreover, Udayant Malhoutra also holds ₹559m worth of Dynamatic Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. On a company level, Dynamatic Technologies prefers to reward its CEO through a salary, opting not to pay Udayant Malhoutra through non-salary benefits. 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 Dynamatic Technologies Limited’s Growth Numbers
Over the past three years, Dynamatic Technologies Limited has seen its earnings per share (EPS) grow by 36% per year. It saw its revenue drop 18% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. While we don’t have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Dynamatic Technologies Limited Been A Good Investment?
Given the total shareholder loss of 54% over three years, many shareholders in Dynamatic Technologies Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Dynamatic Technologies rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, Dynamatic Technologies Limited is currently paying a compensation that’s close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. It’s tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company’s key performance areas. We identified 3 warning signs for Dynamatic Technologies (1 doesn’t sit too well with us!) that you should be aware of before investing here.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our…