What We Learned About Alkali Metals' (NSE:ALKALI) CEO Compensation

Yerramilli Srirama R. Rao has been the CEO of Alkali Metals Limited (NSE:ALKALI) since 2004, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Alkali Metals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Alkali Metals

Comparing Alkali Metals Limited's CEO Compensation With the industry

According to our data, Alkali Metals Limited has a market capitalization of ₹477m, and paid its CEO total annual compensation worth ₹8.2m over the year to March 2020. That's a notable increase of 10% on last year. In particular, the salary of ₹7.58m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.8m. From this we gather that Yerramilli Srirama R. Rao is paid around the median for CEOs in the industry. Furthermore, Yerramilli Srirama R. Rao directly owns ₹321m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. There isn't a significant difference between Alkali Metals and the broader market, in terms of salary allocation in the overall compensation package. 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.

A Look at Alkali Metals Limited's Growth Numbers

Alkali Metals Limited has seen its earnings per share (EPS) increase by 28% a year over the past three years. In the last year, its revenue is down 19%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Alkali Metals Limited Been A Good Investment?

With a three year total loss of 34% for the shareholders, Alkali Metals Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Alkali Metals Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

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 2 warning signs for Alkali Metals (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Alkali Metals, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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