What We Learned About Puravankara's (NSE:PURVA) CEO Compensation

This article will reflect on the compensation paid to Ashish Puravankara who has served as CEO of Puravankara Limited (NSE:PURVA) since 2015. 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 Puravankara

Comparing Puravankara Limited's CEO Compensation With the industry

Our data indicates that Puravankara Limited has a market capitalization of ₹13b, and total annual CEO compensation was reported as ₹13m for the year to March 2020. We note that's a decrease of 41% compared to last year. Notably, the salary of ₹13m is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations ranging from ₹7.4b to ₹30b, the reported median CEO total compensation was ₹19m. From this we gather that Ashish Puravankara is paid around the median for CEOs in the industry.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. At the company level, Puravankara pays Ashish Puravankara solely through a salary, preferring to go down a conventional route. 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.

Puravankara Limited's Growth

Over the last three years, Puravankara Limited has shrunk its earnings per share by 42% per year. Its revenue is down 27% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Puravankara Limited Been A Good Investment?

Given the total shareholder loss of 56% over three years, many shareholders in Puravankara Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Puravankara rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Ashish is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Puravankara (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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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