Shareholders May Be More Conservative With Precision Camshafts Limited's (NSE:PRECAM) CEO Compensation For Now

Despite strong share price growth of 43% for Precision Camshafts Limited (NSE:PRECAM) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 27 July 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See 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 ₹9.5b, and paid its CEO total annual compensation worth ₹34m over the year to March 2021. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹16m.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹8.9m. Hence, we can conclude that Yatin Shah is remunerated higher than the industry median. What's more, Yatin Shah holds ₹3.8b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹16m	₹16m	46%
Other	₹18m	₹18m	54%
Total Compensation	₹34m	₹34m	100%

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. Precision Camshafts sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Precision Camshafts Limited's Growth Numbers

Over the last three years, Precision Camshafts Limited has shrunk its earnings per share by 63% per year. In the last year, its revenue is down 5.0%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Precision Camshafts Limited Been A Good Investment?

Most shareholders would probably be pleased with Precision Camshafts Limited for providing a total return of 43% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Precision Camshafts (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Precision Camshafts 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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