Yogesh Agrawal has been the CEO of Ajanta Pharma Limited (NSE:AJANTPHARM) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Ajanta Pharma
How Does Yogesh Agrawal's Compensation Compare With Similar Sized Companies?
According to our data, Ajanta Pharma Limited has a market capitalization of ₹103b, and paid its CEO total annual compensation worth ₹99m over the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at ₹61m. We examined companies with market caps from ₹75b to ₹239b, and discovered that the median CEO total compensation of that group was ₹48m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 99% of total compensation out of all the companies we analysed, while other remuneration made up 0.9% of the pie. Non-salary compensation represents a greater slice of the remuneration pie for Ajanta Pharma, in sharp contrast to the overall sector.
It would therefore appear that Ajanta Pharma Limited pays Yogesh Agrawal more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at Ajanta Pharma, below.
Is Ajanta Pharma Limited Growing?
Over the last three years Ajanta Pharma Limited has shrunk its earnings per share by an average of 8.6% per year (measured with a line of best fit). Its revenue is up 17% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Ajanta Pharma Limited Been A Good Investment?
With a three year total loss of 28%, Ajanta Pharma Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We examined the amount Ajanta Pharma Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Ajanta Pharma that investors should be aware of in a dynamic business environment.
Important note: Ajanta Pharma may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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