Our View On Pitti Engineering's (NSE:PITTIENG) CEO Pay

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.

See our latest analysis for Pitti Engineering

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

At the time of writing, our data shows that Pitti Engineering Limited has a market capitalization of ₹1.0b, and reported total annual CEO compensation of ₹7.0m for the year to March 2020. That's a notable increase of 37% on last year. We note that the salary portion, which stands at ₹4.62m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.0m. This suggests that Pitti Engineering remunerates its CEO largely in line with the industry average. What's more, Sharad Pitti holds ₹178m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 95% of total compensation out of all the companies we analyzed, while other remuneration made up 4.5% of the pie. Pitti Engineering sets aside a smaller share of compensation for salary, in comparison to the overall 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 Pitti Engineering Limited's Growth Numbers

Over the last three years, Pitti Engineering Limited has shrunk its earnings per share by 32% per year. In the last year, its revenue is down 32%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. 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 Pitti Engineering Limited Been A Good Investment?

Given the total shareholder loss of 47% 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.

In Summary...

As previously discussed, Sharad 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 is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for Pitti Engineering (1 can't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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