Here's Why Shareholders May Want To Be Cautious With Increasing PSP Projects Limited's (NSE:PSPPROJECT) CEO Pay Packet

Key Insights

• PSP Projects to hold its Annual General Meeting on 18th of September
• Total pay for CEO Prahaladbhai Patel includes ₹161.0m salary
• Total compensation is 1,018% above industry average
• PSP Projects' total shareholder return over the past three years was 53% while its EPS was down 0.3% over the past three years

CEO Prahaladbhai Patel has done a decent job of delivering relatively good performance at PSP Projects Limited (NSE:PSPPROJECT) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 18th of September. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for PSP Projects

Comparing PSP Projects Limited's CEO Compensation With The Industry

Our data indicates that PSP Projects Limited has a market capitalization of ₹26b, and total annual CEO compensation was reported as ₹161m for the year to March 2024. That's just a smallish increase of 3.2% on last year. Notably, the salary of ₹161m is the entirety of the CEO compensation.

On examining similar-sized companies in the Indian Construction industry with market capitalizations between ₹17b and ₹67b, we discovered that the median CEO total compensation of that group was ₹14m. Hence, we can conclude that Prahaladbhai Patel is remunerated higher than the industry median. Furthermore, Prahaladbhai Patel directly owns ₹13b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹161m	₹156m	100%
Other	-	-	-
Total Compensation	₹161m	₹156m	100%

On an industry level, roughly 98% of total compensation represents salary and 2% is other remuneration. At the company level, PSP Projects pays Prahaladbhai Patel solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

PSP Projects Limited's Growth

Over the last three years, PSP Projects Limited has not seen its earnings per share change much, though they have deteriorated slightly. In the last year, its revenue is up 24%.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has PSP Projects Limited Been A Good Investment?

Most shareholders would probably be pleased with PSP Projects Limited for providing a total return of 53% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

PSP Projects rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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 PSP Projects that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.