Balram Garg has been the CEO of PC Jeweller Limited (NSE:PCJEWELLER) since 2005, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether PC Jeweller pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
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How Does Total Compensation For Balram Garg Compare With Other Companies In The Industry?
According to our data, PC Jeweller Limited has a market capitalization of ₹6.0b, and paid its CEO total annual compensation worth ₹24m over the year to March 2020. We note that's an increase of 55% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹24m.
In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹6.7m. This suggests that Balram Garg is paid more than the median for the industry. Furthermore, Balram Garg directly owns ₹2.1b worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹24m | ₹16m | 100% |
| Other | - | - | - |
| Total Compensation | ₹24m | ₹16m | 100% |
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. At the company level, PC Jeweller pays Balram Garg solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at PC Jeweller Limited's Growth Numbers
Over the last three years, PC Jeweller Limited has shrunk its earnings per share by 44% per year. In the last year, its revenue is down 40%.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 PC Jeweller Limited Been A Good Investment?
Given the total shareholder loss of 95% over three years, many shareholders in PC Jeweller 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...
PC Jeweller pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Balram is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
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. In our study, we found 3 warning signs for PC Jeweller you should be aware of, and 2 of them are a bit concerning.
Important note: PC Jeweller is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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