It's Unlikely That Banka BioLoo Limited's (NSE:BANKA) CEO Will See A Huge Pay Rise This Year

Key Insights

• Banka BioLoo to hold its Annual General Meeting on 25th of September
• Total pay for CEO Vishal Murarka includes ₹4.52m salary
• The total compensation is 73% higher than the average for the industry
• Banka BioLoo's total shareholder return over the past three years was 74% while its EPS was down 33% over the past three years

Despite strong share price growth of 74% for Banka BioLoo Limited (NSE:BANKA) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 25th of September. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Banka BioLoo

How Does Total Compensation For Vishal Murarka Compare With Other Companies In The Industry?

At the time of writing, our data shows that Banka BioLoo Limited has a market capitalization of ₹787m, and reported total annual CEO compensation of ₹4.5m for the year to March 2023. That's just a smallish increase of 4.8% on last year. Notably, the salary of ₹4.5m is the entirety of the CEO compensation.

For comparison, other companies in the India Commercial Services industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹2.6m. This suggests that Vishal Murarka is paid more than the median for the industry. Moreover, Vishal Murarka also holds ₹84m worth of Banka BioLoo stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹4.5m	₹4.3m	100%
Other	-	-	-
Total Compensation	₹4.5m	₹4.3m	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. On a company level, Banka BioLoo prefers to reward its CEO through a salary, opting not to pay Vishal Murarka through non-salary benefits. 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 Banka BioLoo Limited's Growth Numbers

Over the last three years, Banka BioLoo Limited has shrunk its earnings per share by 33% per year. Its revenue is down 5.5% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Banka BioLoo Limited Been A Good Investment?

Most shareholders would probably be pleased with Banka BioLoo Limited for providing a total return of 74% over three years. 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...

Banka BioLoo pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which make us uncomfortable) in Banka BioLoo we think you should know about.

Important note: Banka BioLoo 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.