Here's What We Think About IOL Chemicals and Pharmaceuticals' (NSE:IOLCP) CEO Pay

Varinder Gupta has been the CEO of IOL Chemicals and Pharmaceuticals Limited (NSE:IOLCP) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for IOL Chemicals and Pharmaceuticals.

Check out our latest analysis for IOL Chemicals and Pharmaceuticals

Comparing IOL Chemicals and Pharmaceuticals Limited's CEO Compensation With the industry

According to our data, IOL Chemicals and Pharmaceuticals Limited has a market capitalization of ₹44b, and paid its CEO total annual compensation worth ₹50m over the year to March 2020. We note that's an increase of 35% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹19m.

On comparing similar companies from the same industry with market caps ranging from ₹15b to ₹59b, we found that the median CEO total compensation was ₹23m. Accordingly, our analysis reveals that IOL Chemicals and Pharmaceuticals Limited pays Varinder Gupta north of the industry median. Furthermore, Varinder Gupta directly owns ₹887m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 97% of total compensation represents salary and 2.8% is other remuneration. IOL Chemicals and Pharmaceuticals sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at IOL Chemicals and Pharmaceuticals Limited's Growth Numbers

IOL Chemicals and Pharmaceuticals Limited has seen its earnings per share (EPS) increase by 296% a year over the past three years. Its revenue is up 2.5% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 IOL Chemicals and Pharmaceuticals Limited Been A Good Investment?

We think that the total shareholder return of 1,496%, over three years, would leave most IOL Chemicals and Pharmaceuticals Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As we touched on above, IOL Chemicals and Pharmaceuticals 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. But EPS growth and shareholder returns have been top-notch for the past three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Varinder's performance creates value for the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for IOL Chemicals and Pharmaceuticals that investors should think about before committing capital to this 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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