Should You Worry About Pitti Engineering Limited's (NSE:PITTIENG) CEO Pay?

Sharad Pitti is the CEO of Pitti Engineering Limited (NSE:PITTIENG). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Pitti Engineering

How Does Sharad Pitti's Compensation Compare With Similar Sized Companies?

According to our data, Pitti Engineering Limited has a market capitalization of ₹1.0b, and pays its CEO total annual compensation worth ₹4.8m. (This number is for the twelve months until March 2018). Notably, the salary of ₹4.6m is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below ₹14b. The median CEO total compensation in that group is ₹1.5m.

It would therefore appear that Pitti Engineering Limited pays Sharad Pitti more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Pitti Engineering, below.

Is Pitti Engineering Limited Growing?

Over the last three years Pitti Engineering Limited has grown its earnings per share (EPS) by an average of 85% per year (using a line of best fit). Its revenue is up 53% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business.

Has Pitti Engineering Limited Been A Good Investment?

With a three year total loss of 22%, Pitti Engineering Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount Pitti Engineering Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Pitti Engineering shares (free trial).

Important note: Pitti Engineering may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.