Why We Think Aarti Drugs Limited's (NSE:AARTIDRUGS) CEO Compensation Is Not Excessive At All

Key Insights

• Aarti Drugs to hold its Annual General Meeting on 24th of September
• CEO Prakash Patil's total compensation includes salary of ₹8.89m
• The total compensation is similar to the average for the industry
• Over the past three years, Aarti Drugs' EPS grew by 0.1% and over the past three years, the total shareholder return was 9.3%

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Performance at Aarti Drugs Limited (NSE:AARTIDRUGS) has been reasonably good and CEO Prakash Patil has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 24th of September. Here is our take on why we think the CEO compensation looks appropriate.

View 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 ₹47b, and reported total annual CEO compensation of ₹29m for the year to March 2025. That's a fairly small increase of 5.5% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹8.9m.

For comparison, other companies in the Indian Pharmaceuticals industry with market capitalizations ranging between ₹18b and ₹70b had a median total CEO compensation of ₹31m. So it looks like Aarti Drugs compensates Prakash Patil in line with the median for the industry. Furthermore, Prakash Patil directly owns ₹4.6b worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 99% of total compensation represents salary and 0.79361173% is other remuneration. Aarti Drugs pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Aarti Drugs Limited's Growth Numbers

Aarti Drugs Limited saw earnings per share stay pretty flat over the last three years. Revenue was pretty flat on last year.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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?

Aarti Drugs Limited has not done too badly by shareholders, with a total return of 9.3%, over three years. It would be nice to see that metric improve in the future. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

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. That's why we did some digging and identified 1 warning sign for Aarti Drugs that you should be aware of before investing.

Switching gears from Aarti Drugs, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.