What Can We Learn About Aarti Drugs' (NSE:AARTIDRUGS) CEO Compensation?

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.

Check out our latest analysis for Aarti Drugs

How Does Total Compensation For Prakash Patil Compare With Other Companies In The Industry?

According to our data, Aarti Drugs Limited has a market capitalization of ₹65b, 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 we always look at total compensation first, our analysis shows that the salary component is less, at ₹6.9m.

On examining similar-sized companies in the industry with market capitalizations between ₹29b and ₹117b, we discovered that the median CEO total compensation of that group was ₹28m. That is to say, Prakash Patil is paid under the industry median. What's more, Prakash Patil holds ₹5.9b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 99% of total compensation represents salary and 1.2% is other remuneration. Aarti Drugs sets aside a smaller share of compensation for salary, in comparison to the overall 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 51% per year. In the last year, its revenue is up 19%.

This demonstrates that the company has been improving recently and is good news for the shareholders. 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 Aarti Drugs Limited Been A Good Investment?

Most shareholders would probably be pleased with Aarti Drugs Limited for providing a total return of 309% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we noted earlier, Aarti Drugs pays its CEO lower than the norm for similar-sized companies belonging to the same industry. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 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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