Increases to CEO Compensation Might Be Put On Hold For Now at Alkali Metals Limited (NSE:ALKALI)

Key Insights

• Alkali Metals to hold its Annual General Meeting on 21st of August
• CEO Yerramilli Srirama R. Rao's total compensation includes salary of ₹9.51m
• The overall pay is 87% above the industry average
• Alkali Metals' total shareholder return over the past three years was 69% while its EPS was down 22% over the past three years

The share price of Alkali Metals Limited (NSE:ALKALI) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 21st of August may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. 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.

See our latest analysis for Alkali Metals

How Does Total Compensation For Yerramilli Srirama R. Rao Compare With Other Companies In The Industry?

At the time of writing, our data shows that Alkali Metals Limited has a market capitalization of ₹1.2b, and reported total annual CEO compensation of ₹11m for the year to March 2024. That is, the compensation was roughly the same as last year. In particular, the salary of ₹9.51m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Indian Chemicals industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹5.7m. Accordingly, our analysis reveals that Alkali Metals Limited pays Yerramilli Srirama R. Rao north of the industry median. What's more, Yerramilli Srirama R. Rao holds ₹817m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹9.5m	₹8.6m	89%
Other	₹1.2m	₹2.2m	11%
Total Compensation	₹11m	₹11m	100%

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 13% 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 dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Alkali Metals Limited's Growth

Alkali Metals Limited has reduced its earnings per share by 22% a year over the last three years. It saw its revenue drop 3.6% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last 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 Alkali Metals Limited Been A Good Investment?

We think that the total shareholder return of 69%, over three years, would leave most Alkali Metals Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

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.

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. That's why we did our research, and identified 4 warning signs for Alkali Metals (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Alkali Metals 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.