Our Take On Precision Camshafts' (NSE:PRECAM) CEO Salary

The CEO of Precision Camshafts Limited (NSE:PRECAM) is Yatin Shah, and this article examines 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.

Check out our latest analysis for Precision Camshafts

How Does Total Compensation For Yatin Shah Compare With Other Companies In The Industry?

According to our data, Precision Camshafts Limited has a market capitalization of ₹4.2b, and paid its CEO total annual compensation worth ₹34m over the year to March 2020. That's a modest increase of 4.9% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹16m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹10m. This suggests that Yatin Shah is paid more than the median for the industry. Furthermore, Yatin Shah directly owns ₹1.6b worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. In Precision Camshafts' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Precision Camshafts Limited's Growth

Over the last three years, Precision Camshafts Limited has shrunk its earnings per share by 33% per year. In the last year, its revenue is down 13%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Precision Camshafts Limited Been A Good Investment?

Since shareholders would have lost about 57% over three years, some Precision Camshafts Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Precision Camshafts Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Precision Camshafts (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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. 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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