How Should Investors React To Alembic Pharmaceuticals’ (NSE:APLLTD) CEO Pay?

This article will reflect on the compensation paid to Chirayu Amin who has served as CEO of Alembic Pharmaceuticals Limited (NSE:APLLTD) since 2016. This analysis will also assess whether Alembic Pharmaceuticals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Alembic Pharmaceuticals

How Does Total Compensation For Chirayu Amin Compare With Other Companies In The Industry?

Our data indicates that Alembic Pharmaceuticals Limited has a market capitalization of ₹214b, and total annual CEO compensation was reported as ₹265m for the year to March 2020. That’s a fairly small increase of 3.9% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹65m.

In comparison with other companies in the industry with market capitalizations ranging from ₹150b to ₹480b, the reported median CEO total compensation was ₹109m. Hence, we can conclude that Chirayu Amin is remunerated higher than the industry median. Furthermore, Chirayu Amin directly owns ₹4.9b worth of shares in the company, implying that they are deeply invested in the company’s success.

Component20202019Proportion (2020)
Salary ₹65m ₹55m 25%
Other ₹200m ₹200m 75%
Total Compensation₹265m ₹255m100%

Talking in terms of the industry, salary represented approximately 99% of total compensation out of all the companies we analyzed, while other remuneration made up 1.2% of the pie. Alembic Pharmaceuticals pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.

NSEI:APLLTD CEO Compensation August 12th 2020

Alembic Pharmaceuticals Limited’s Growth

Alembic Pharmaceuticals Limited’s earnings per share (EPS) grew 40% per year over the last three years. In the last year, its revenue is up 24%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what’s coming up next but if you want to peer into the company’s future you might be interested in this free visualization of analyst forecasts.

Has Alembic Pharmaceuticals Limited Been A Good Investment?

We think that the total shareholder return of 116%, over three years, would leave most Alembic 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.

To Conclude…

As previously discussed, Chirayu is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But earnings 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. And given most shareholders are probably very happy with recent returns, they might even think that Chirayu deserves a raise!

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That’s why we did some digging and identified 3 warning signs for Alembic 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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