Key Things To Understand About Pitti Engineering's (NSE:PITTIENG) CEO Pay Cheque

By
Simply Wall St
Published
February 10, 2021
NSEI:PITTIENG
Source: Shutterstock

The CEO of Pitti Engineering Limited (NSE:PITTIENG) is Sharad Pitti, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Pitti Engineering.

Check out our latest analysis for Pitti Engineering

How Does Total Compensation For Sharad Pitti Compare With Other Companies In The Industry?

Our data indicates that Pitti Engineering Limited has a market capitalization of ₹2.1b, and total annual CEO compensation was reported as ₹7.0m for the year to March 2020. That's a notable increase of 37% on last year. Notably, the salary which is ₹4.62m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.4m. This suggests that Pitti Engineering remunerates its CEO largely in line with the industry average. Moreover, Sharad Pitti also holds ₹407m worth of Pitti Engineering stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary ₹4.6m ₹4.6m 66%
Other ₹2.4m ₹459k 34%
Total Compensation₹7.0m ₹5.1m100%

Speaking on an industry level, nearly 94% of total compensation represents salary, while the remainder of 6.2% is other remuneration. Pitti Engineering pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
NSEI:PITTIENG CEO Compensation February 11th 2021

A Look at Pitti Engineering Limited's Growth Numbers

Over the last three years, Pitti Engineering Limited has shrunk its earnings per share by 20% per year. Its revenue is down 30% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Pitti Engineering Limited Been A Good Investment?

Given the total shareholder loss of 32% over three years, many shareholders in Pitti Engineering Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Sharad is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which is a bit unpleasant) in Pitti Engineering we think you should know about.

Important note: Pitti Engineering 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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