Why We Think Rossari Biotech Limited's (NSE:ROSSARI) CEO Compensation Is Not Excessive At All

Key Insights

• Rossari Biotech's Annual General Meeting to take place on 23rd of August
• Salary of ₹12.1m is part of CEO Sunil Chari's total remuneration
• The overall pay is 47% below the industry average
• Rossari Biotech's three-year loss to shareholders was 32% while its EPS grew by 14% over the past three years

The performance at Rossari Biotech Limited (NSE:ROSSARI) has been rather lacklustre of late and shareholders may be wondering what CEO Sunil Chari is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 23rd of August. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Rossari Biotech

Comparing Rossari Biotech Limited's CEO Compensation With The Industry

Our data indicates that Rossari Biotech Limited has a market capitalization of ₹50b, and total annual CEO compensation was reported as ₹12m for the year to March 2024. That's a notable increase of 9.0% on last year. Notably, the salary of ₹12m is the entirety of the CEO compensation.

For comparison, other companies in the Indian Chemicals industry with market capitalizations ranging between ₹17b and ₹67b had a median total CEO compensation of ₹23m. This suggests that Sunil Chari is paid below the industry median. Moreover, Sunil Chari also holds ₹16b worth of Rossari Biotech stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹12m	₹11m	100%
Other	-	-	-
Total Compensation	₹12m	₹11m	100%

On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. Speaking on a company level, Rossari Biotech prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Rossari Biotech Limited's Growth

Rossari Biotech Limited's earnings per share (EPS) grew 14% per year over the last three years. It achieved revenue growth of 17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Rossari Biotech Limited Been A Good Investment?

Few Rossari Biotech Limited shareholders would feel satisfied with the return of -32% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Rossari Biotech pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

So you may want to check if insiders are buying Rossari Biotech shares with their own money (free access).

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.