Prakash Patil is the CEO of Aarti Drugs Limited (NSE:AARTIDRUGS), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Aarti Drugs Limited's CEO Compensation With the industry
According to our data, Aarti Drugs Limited has a market capitalization of ₹92b, and paid its CEO total annual compensation worth ₹19m over the year to March 2020. That's a notable increase of 24% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹6.9m.
On comparing similar companies from the same industry with market caps ranging from ₹73b to ₹234b, we found that the median CEO total compensation was ₹70m. This suggests that Prakash Patil is paid below the industry median. What's more, Prakash Patil holds ₹8.5b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 98% of total compensation represents salary, while the remainder of 2.0% is other remuneration. In Aarti Drugs' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Aarti Drugs Limited's Growth Numbers
Over the past three years, Aarti Drugs Limited has seen its earnings per share (EPS) grow by 43% per year. Its revenue is up 22% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Aarti Drugs Limited Been A Good Investment?
Most shareholders would probably be pleased with Aarti Drugs Limited for providing a total return of 648% 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.
As we noted earlier, Aarti Drugs pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think Prakash deserves a raise!
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for Aarti Drugs that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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