Shareholders May Not Be So Generous With Pitti Engineering Limited's (NSE:PITTIENG) CEO Compensation And Here's Why

Performance at Pitti Engineering Limited (NSE:PITTIENG) has been reasonably good and CEO Sharad Pitti has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 23 September 2022. However, some shareholders will still be cautious of paying the CEO excessively.

Check out 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 ₹9.5b, and reported total annual CEO compensation of ₹9.9m for the year to March 2022. This was the same amount the CEO received in the prior year. Notably, the salary of ₹9.9m is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations under ₹16b, the reported median total CEO compensation was ₹5.0m. Accordingly, our analysis reveals that Pitti Engineering Limited pays Sharad Pitti north of the industry median. Moreover, Sharad Pitti also holds ₹1.8b worth of Pitti Engineering stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. Speaking on a company level, Pitti Engineering prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Pitti Engineering Limited's Growth

Pitti Engineering Limited's earnings per share (EPS) grew 31% per year over the last three years. It achieved revenue growth of 72% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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?

Most shareholders would probably be pleased with Pitti Engineering Limited for providing a total return of 620% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Pitti Engineering pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Pitti Engineering (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Pitti Engineering, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.