Why Peria Karamalai Tea and Produce's (NSE:PKTEA) CEO Pay Matters

Sanjeev Singh is the CEO of The Peria Karamalai Tea and Produce Company Limited (NSE:PKTEA), and in this article, we analyze the executive's compensation package 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.

Check out our latest analysis for Peria Karamalai Tea and Produce

How Does Total Compensation For Sanjeev Singh Compare With Other Companies In The Industry?

Our data indicates that The Peria Karamalai Tea and Produce Company Limited has a market capitalization of ₹560m, and total annual CEO compensation was reported as ₹8.5m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is ₹7.05m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹3.2m. Hence, we can conclude that Sanjeev Singh is remunerated higher than the industry median.

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. Peria Karamalai Tea and Produce sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at The Peria Karamalai Tea and Produce Company Limited's Growth Numbers

The Peria Karamalai Tea and Produce Company Limited has reduced its earnings per share by 9.5% a year over the last three years. In the last year, its revenue is up 45%.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 The Peria Karamalai Tea and Produce Company Limited Been A Good Investment?

Given the total shareholder loss of 58% over three years, many shareholders in The Peria Karamalai Tea and Produce Company 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...

As previously discussed, Sanjeev is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. It concerns us that EPS growth for the company is negative, while share price gains did not materialize over the last three years. In contrast, revenue growth for the company has been showing a positive trend. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which can't be ignored) in Peria Karamalai Tea and Produce we think you should know about.

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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