How Is PSP Projects' (NSE:PSPPROJECT) CEO Compensated?

Prahlad Patel became the CEO of PSP Projects Limited (NSE:PSPPROJECT) in 2016, and we think it's a good time to look at 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 PSP Projects.

Check out our latest analysis for PSP Projects

How Does Total Compensation For Prahlad Patel Compare With Other Companies In The Industry?

At the time of writing, our data shows that PSP Projects Limited has a market capitalization of ₹17b, and reported total annual CEO compensation of ₹54m for the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary of ₹54m is the entirety of the CEO compensation.

On comparing similar companies from the same industry with market caps ranging from ₹7.3b to ₹29b, we found that the median CEO total compensation was ₹34m. Accordingly, our analysis reveals that PSP Projects Limited pays Prahlad Patel north of the industry median. What's more, Prahlad Patel holds ₹8.6b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. On a company level, PSP Projects prefers to reward its CEO through a salary, opting not to pay Prahlad Patel through non-salary benefits. 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 PSP Projects Limited's Growth Numbers

PSP Projects Limited's earnings per share (EPS) grew 3.0% per year over the last three years. In the last year, its revenue is down 13%.

We would prefer it if there was revenue growth, but the modest EPSgrowth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 PSP Projects Limited Been A Good Investment?

Since shareholders would have lost about 1.6% over three years, some PSP Projects Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

PSP Projects rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, PSP Projects Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The growth in the business has been uninspiring, but the shareholder returns for PSP Projects have arguably been worse, over the last three years. This doesn't look good when you see that Prahlad is earning more than the industry median. Taking all this into account, it could be hard to get shareholder support for giving Prahlad a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for PSP Projects that investors should look into moving forward.

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. 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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