We Take A Look At Why Aarti Drugs Limited's (NSE:AARTIDRUGS) CEO Has Earned Their Pay Packet

The performance at Aarti Drugs Limited (NSE:AARTIDRUGS) has been quite strong recently and CEO Prakash Patil has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 04 September 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for Aarti Drugs

Comparing Aarti Drugs Limited's CEO Compensation With the industry

At the time of writing, our data shows that Aarti Drugs Limited has a market capitalization of ₹56b, and reported total annual CEO compensation of ₹35m for the year to March 2021. We note that's an increase of 81% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹8.3m.

For comparison, other companies in the same industry with market capitalizations ranging between ₹29b and ₹118b had a median total CEO compensation of ₹31m. From this we gather that Prakash Patil is paid around the median for CEOs in the industry. Furthermore, Prakash Patil directly owns ₹5.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹8.3m	₹6.9m	24%
Other	₹26m	₹12m	76%
Total Compensation	₹35m	₹19m	100%

On an industry level, roughly 94% of total compensation represents salary and 6% is other remuneration. It's interesting to note that Aarti Drugs allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Aarti Drugs Limited's Growth Numbers

Aarti Drugs Limited has seen its earnings per share (EPS) increase by 38% a year over the past three years. In the last year, its revenue is up 13%.

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

Has Aarti Drugs Limited Been A Good Investment?

Most shareholders would probably be pleased with Aarti Drugs Limited for providing a total return of 338% 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...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Aarti Drugs that you should be aware of before investing.

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. 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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