What Does S.P. Apparels' (NSE:SPAL) CEO Pay Reveal?

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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for S.P. Apparels

How Does Total Compensation For Perumal Sundararajan Compare With Other Companies In The Industry?

Our data indicates that S.P. Apparels Limited has a market capitalization of ₹4.3b, and total annual CEO compensation was reported as ₹12m for 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.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.8m. Accordingly, our analysis reveals that S.P. Apparels Limited pays Perumal Sundararajan north of the industry median. Moreover, Perumal Sundararajan also holds ₹2.2b 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.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. On a company level, S.P. Apparels prefers to reward its CEO through a salary, opting not to pay Perumal Sundararajan through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

S.P. Apparels Limited's Growth

Over the last three years, S.P. Apparels Limited has shrunk its earnings per share by 33% per year. It saw its revenue drop 34% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has S.P. Apparels Limited Been A Good Investment?

Given the total shareholder loss of 58% over three years, many shareholders in S.P. Apparels Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

S.P. Apparels rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, S.P. Apparels 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. This doesn't look good against shareholder returns, which have been negative for the past 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 it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 4 warning signs for S.P. Apparels that investors should be aware of in a dynamic business environment.

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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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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