Is Precot Meridian Limited’s (NSE:PRECOT) CEO Overpaid Relative To Its Peers?

Ashwin Chandran has been the CEO of Precot Meridian Limited (NSE:PRECOT) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Precot Meridian

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How Does Ashwin Chandran’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Precot Meridian Limited has a market cap of ₹714m, and is paying total annual CEO compensation of ₹7.6m. (This number is for the twelve months until 2018). Notably, the salary of ₹7.6m 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 compensation in that group is ₹1.5m.

As you can see, Ashwin Chandran is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Precot Meridian Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Precot Meridian, below.

NSEI:PRECOT CEO Compensation January 30th 19
NSEI:PRECOT CEO Compensation January 30th 19

Is Precot Meridian Limited Growing?

On average over the last three years, Precot Meridian Limited has grown earnings per share (EPS) by 38% each year (using a line of best fit). In the last year, its revenue is up 4.4%.

This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.

Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Precot Meridian Limited Been A Good Investment?

Precot Meridian Limited has generated a total shareholder return of 23% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Precot Meridian Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. Shareholders may want to check for free if Precot Meridian insiders are buying or selling shares.

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.