Shareholders May Not Be So Generous With Precision Wires India Limited's (NSE:PRECWIRE) CEO Compensation And Here's Why

Under the guidance of CEO Mahendra Mehta, Precision Wires India Limited (NSE:PRECWIRE) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 01 September 2021. However, some shareholders may still want to keep CEO compensation within reason.

View our latest analysis for Precision Wires India

How Does Total Compensation For Mahendra Mehta Compare With Other Companies In The Industry?

Our data indicates that Precision Wires India Limited has a market capitalization of ₹5.6b, and total annual CEO compensation was reported as ₹8.5m for the year to March 2021. That's a modest increase of 4.6% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹2.4m.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹5.8m. Accordingly, our analysis reveals that Precision Wires India Limited pays Mahendra Mehta north of the industry median. Furthermore, Mahendra Mehta directly owns ₹215m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹2.4m	₹3.1m	28%
Other	₹6.1m	₹5.1m	72%
Total Compensation	₹8.5m	₹8.2m	100%

On an industry level, around 98% of total compensation represents salary and 2% is other remuneration. In Precision Wires India's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Precision Wires India Limited's Growth Numbers

Precision Wires India Limited's earnings per share (EPS) grew 11% per year over the last three years. In the last year, its revenue is up 67%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Precision Wires India Limited Been A Good Investment?

Precision Wires India Limited has generated a total shareholder return of 8.8% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Precision Wires India that you should be aware of before investing.

Important note: Precision Wires India 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. 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.
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