Key Things To Understand About S.P. Apparels' (NSE:SPAL) CEO Pay Cheque

The CEO of S.P. Apparels Limited (NSE:SPAL) is Perumal Sundararajan, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether S.P. Apparels pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for S.P. Apparels

Comparing S.P. Apparels Limited's CEO Compensation With the industry

According to our data, S.P. Apparels Limited has a market capitalization of ₹3.8b, and paid its CEO total annual compensation worth ₹12m over the year to March 2020. That's a notable decrease of 29% on last year. Notably, the salary of ₹12m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.2m. This suggests that Perumal Sundararajan is paid more than the median for the industry. Moreover, Perumal Sundararajan also holds ₹1.9b worth of S.P. Apparels stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. At the company level, S.P. Apparels pays Perumal Sundararajan solely through a salary, preferring to go down a conventional route. 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 S.P. Apparels Limited's Growth Numbers

Over the last three years, S.P. Apparels Limited has shrunk its earnings per share by 17% per year. In the last year, its revenue is down 24%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 S.P. Apparels Limited Been A Good Investment?

Given the total shareholder loss of 63% over three years, many shareholders in S.P. Apparels Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

S.P. Apparels pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, S.P. Apparels pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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 4 warning signs for S.P. Apparels that you should be aware of before investing.

Switching gears from S.P. Apparels, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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