Shareholders May Be More Conservative With Pearl Polymers Limited's (NSE:PEARLPOLY) CEO Compensation For Now

Key Insights

• Pearl Polymers to hold its Annual General Meeting on 24th of September
• Total pay for CEO Udit Seth includes ₹4.19m salary
• The total compensation is 65% higher than the average for the industry
• Over the past three years, Pearl Polymers' EPS fell by 58% and over the past three years, the total shareholder return was 163%

Pearl Polymers Limited (NSE:PEARLPOLY) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 24th of September. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Pearl Polymers

Comparing Pearl Polymers Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Pearl Polymers Limited has a market capitalization of ₹703m, and reported total annual CEO compensation of ₹5.9m for the year to March 2024. Notably, that's an increase of 23% over the year before. Notably, the salary which is ₹4.19m, represents most of the total compensation being paid.

In comparison with other companies in the Indian Packaging industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹3.6m. Hence, we can conclude that Udit Seth is remunerated higher than the industry median. Moreover, Udit Seth also holds ₹27m worth of Pearl Polymers stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹4.2m	₹4.2m	71%
Other	₹1.7m	₹600k	29%
Total Compensation	₹5.9m	₹4.8m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. It's interesting to note that Pearl Polymers allocates a smaller portion of compensation to salary in comparison to the broader 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.

Pearl Polymers Limited's Growth

Over the last three years, Pearl Polymers Limited has shrunk its earnings per share by 58% per year. In the last year, its revenue is up 14%.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. 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 Pearl Polymers Limited Been A Good Investment?

Boasting a total shareholder return of 163% over three years, Pearl Polymers Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Pearl Polymers (1 doesn't sit too well with us!) that you should be aware of before investing here.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.