In 2014 Aditya Rao was appointed CEO of Pennar Industries Limited (NSE:PENIND). First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
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How Does Aditya Rao's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Pennar Industries Limited has a market cap of ₹3.8b, and is paying total annual CEO compensation of ₹19m. (This figure is for the year to March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹11m. 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 Aditya Rao receives more in total compensation than the median of a group of companies in the same market, and of similar size to Pennar Industries Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Pennar Industries has changed over time.
Is Pennar Industries Limited Growing?
Over the last three years Pennar Industries Limited has grown its earnings per share (EPS) by an average of 26% per year (using a line of best fit). Its revenue is up 19% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Pennar Industries Limited Been A Good Investment?
With a three year total loss of 32%, Pennar Industries Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Pennar Industries Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Pennar Industries (free visualization of insider trades).
If you want to buy a stock that is better than Pennar Industries, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.