Key Things To Understand About Pil Italica Lifestyle's (NSE:PILITA) CEO Pay Cheque

Daud Dawood became the CEO of Pil Italica Lifestyle Limited (NSE:PILITA) in 1992, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Pil Italica Lifestyle

Comparing Pil Italica Lifestyle Limited's CEO Compensation With the industry

According to our data, Pil Italica Lifestyle Limited has a market capitalization of ₹1.6b, and paid its CEO total annual compensation worth ₹4.7m over the year to March 2020. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹4.7m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹5.2m. So it looks like Pil Italica Lifestyle compensates Daud Dawood in line with the median for the industry. Moreover, Daud Dawood also holds ₹2.1m worth of Pil Italica Lifestyle 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 88% of total compensation represents salary and 12% is other remuneration. At the company level, Pil Italica Lifestyle pays Daud Dawood solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Pil Italica Lifestyle Limited's Growth

Over the last three years, Pil Italica Lifestyle Limited has shrunk its earnings per share by 55% per year. It saw its revenue drop 14% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Pil Italica Lifestyle Limited Been A Good Investment?

Since shareholders would have lost about 50% over three years, some Pil Italica Lifestyle Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Pil Italica Lifestyle rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Daud is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Pil Italica Lifestyle that investors should think about before committing capital to this stock.

Important note: Pil Italica Lifestyle 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. 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.
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