Here's What We Learned About The CEO Pay At Pennar Industries Limited (NSE:PENIND)

This article will reflect on the compensation paid to Aditya Rao who has served as CEO of Pennar Industries Limited (NSE:PENIND) since 2014. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Pennar Industries.

See our latest analysis for Pennar Industries

Comparing Pennar Industries Limited's CEO Compensation With the industry

According to our data, Pennar Industries Limited has a market capitalization of ₹2.8b, and paid its CEO total annual compensation worth ₹12m over the year to March 2020. That is, the compensation was roughly the same as last year. In particular, the salary of ₹9.99m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.3m. Hence, we can conclude that Aditya Rao is remunerated higher than the industry median. Moreover, Aditya Rao also holds ₹177m worth of Pennar Industries 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, nearly 98% of total compensation represents salary, while the remainder of 2.1% is other remuneration. Pennar Industries pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Pennar Industries Limited's Growth

Pennar Industries Limited has reduced its earnings per share by 37% a year over the last three years. In the last year, its revenue is down 32%.

Overall this is not a very positive result for shareholders. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Pennar Industries Limited Been A Good Investment?

Since shareholders would have lost about 68% over three years, some Pennar Industries Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Pennar Industries 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. Disappointingly, share price gains over the last three years have failed to materialize. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Pennar Industries (2 shouldn't be ignored!) that you should be aware of before investing here.

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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