We Think Pennar Industries Limited's (NSE:PENIND) CEO Compensation Package Needs To Be Put Under A Microscope

Shareholders will probably not be too impressed with the underwhelming results at Pennar Industries Limited (NSE:PENIND) recently. At the upcoming AGM on 30 September 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Pennar Industries

How Does Total Compensation For Aditya Rao Compare With Other Companies In The Industry?

According to our data, Pennar Industries Limited has a market capitalization of ₹4.1b, and paid its CEO total annual compensation worth ₹6.9m over the year to March 2021. Notably, that's a decrease of 41% over the year before. Notably, the salary which is ₹5.16m, 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 ₹3.0m. Hence, we can conclude that Aditya Rao is remunerated higher than the industry median. What's more, Aditya Rao holds ₹242m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹5.2m	₹10.0m	75%
Other	₹1.7m	₹1.7m	25%
Total Compensation	₹6.9m	₹12m	100%

On an industry level, roughly 100% of total compensation represents salary and 0.14075% is other remuneration. Pennar Industries sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Pennar Industries Limited's Growth

Over the last three years, Pennar Industries Limited has shrunk its earnings per share by 27% per year. In the last year, its revenue is up 6.5%.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation 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?

With a three year total loss of 30% for the shareholders, Pennar Industries Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 5 warning signs (and 2 which can't be ignored) in Pennar Industries 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. 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.
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