Most Shareholders Will Probably Agree With Alkali Metals Limited's (NSE:ALKALI) CEO Compensation

Despite Alkali Metals Limited's (NSE:ALKALI) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 21 August 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View 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 ₹793m, and reported total annual CEO compensation of ₹7.3m for the year to March 2021. That's a notable decrease of 11% on last year. Notably, the salary which is ₹7.20m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹5.6m. So it looks like Alkali Metals compensates Yerramilli Srirama R. Rao in line with the median for the industry. Furthermore, Yerramilli Srirama R. Rao directly owns ₹537m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹7.2m	₹7.6m	99%
Other	₹109k	₹592k	1%
Total Compensation	₹7.3m	₹8.2m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Investors will find it interesting that Alkali Metals pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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 reduced its earnings per share by 73% a year over the last three years. In the last year, its revenue is down 9.8%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. 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 Alkali Metals Limited Been A Good Investment?

Alkali Metals Limited has generated a total shareholder return of 31% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Alkali Metals pays its CEO a majority of compensation through a salary. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 2 which are a bit concerning) in Alkali Metals we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
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