What Can We Make Of Paisalo Digital's (NSE:PAISALO) CEO Compensation?

Sunil Agarwal has been the CEO of Paisalo Digital Limited (NSE:PAISALO) since 2008, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Paisalo Digital

Comparing Paisalo Digital Limited's CEO Compensation With the industry

At the time of writing, our data shows that Paisalo Digital Limited has a market capitalization of ₹30b, and reported total annual CEO compensation of ₹30m for the year to March 2020. That's a notable decrease of 45% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹30m.

In comparison with other companies in the industry with market capitalizations ranging from ₹15b to ₹59b, the reported median CEO total compensation was ₹8.8m. This suggests that Sunil Agarwal is paid more than the median for the industry. Moreover, Sunil Agarwal also holds ₹2.3b worth of Paisalo Digital stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Speaking on a company level, Paisalo Digital prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Paisalo Digital Limited's Growth Numbers

Paisalo Digital Limited has reduced its earnings per share by 2.9% a year over the last three years. Its revenue is down 7.9% over the previous year.

Its a bit disappointing to see that the company has failed to grow its EPS. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Paisalo Digital Limited Been A Good Investment?

We think that the total shareholder return of 213%, over three years, would leave most Paisalo Digital Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Paisalo Digital rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, Paisalo Digital 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. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Paisalo Digital we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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