Here's Why Shareholders Should Examine PPAP Automotive Limited's (NSE:PPAP) CEO Compensation Package More Closely

Key Insights

• PPAP Automotive's Annual General Meeting to take place on 13th of September
• Salary of ₹12.0m is part of CEO Abhishek Jain's total remuneration
• The total compensation is 103% higher than the average for the industry
• PPAP Automotive's three-year loss to shareholders was 12% while its EPS was down 113% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at PPAP Automotive Limited (NSE:PPAP) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 13th of September. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for PPAP Automotive

Comparing PPAP Automotive Limited's CEO Compensation With The Industry

At the time of writing, our data shows that PPAP Automotive Limited has a market capitalization of ₹2.9b, and reported total annual CEO compensation of ₹13m for the year to March 2024. That's a notable increase of 72% on last year. We note that the salary portion, which stands at ₹12.0m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Auto Components industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹6.3m. This suggests that Abhishek Jain is paid more than the median for the industry. What's more, Abhishek Jain holds ₹210m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹12m	₹7.0m	94%
Other	₹730k	₹437k	6%
Total Compensation	₹13m	₹7.4m	100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. According to our research, PPAP Automotive has allocated a higher percentage of pay to salary in comparison to the wider 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 PPAP Automotive Limited's Growth Numbers

Over the last three years, PPAP Automotive Limited has shrunk its earnings per share by 113% per year. It achieved revenue growth of 4.9% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 PPAP Automotive Limited Been A Good Investment?

With a three year total loss of 12% for the shareholders, PPAP Automotive Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for PPAP Automotive you should be aware of, and 2 of them make us uncomfortable.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.