What Can We Make Of Ajanta Pharma's (NSE:AJANTPHARM) CEO Compensation?

Yogesh Agrawal became the CEO of Ajanta Pharma Limited (NSE:AJANTPHARM) in 2007, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Ajanta Pharma.

View our latest analysis for Ajanta Pharma

How Does Total Compensation For Yogesh Agrawal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ajanta Pharma Limited has a market capitalization of ₹153b, and reported total annual CEO compensation of ₹107m for the year to March 2020. Notably, that's an increase of 8.3% over the year before. We note that the salary portion, which stands at ₹66.0m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between ₹73b and ₹234b, we discovered that the median CEO total compensation of that group was ₹70m. This suggests that Yogesh Agrawal is paid more than the median for the industry. Moreover, Yogesh Agrawal also holds ₹22b worth of Ajanta Pharma stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 99% of total compensation represents salary and 1.2% is other remuneration. Ajanta Pharma pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Ajanta Pharma Limited's Growth

Ajanta Pharma Limited's earnings per share (EPS) grew 5.0% per year over the last three years. It achieved revenue growth of 20% over the last year.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. So while performance isn't amazing, we think it really does seem quite respectable. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Ajanta Pharma Limited Been A Good Investment?

Ajanta Pharma Limited has served shareholders reasonably well, with a total return of 13% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As previously discussed, Yogesh is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the business isn't growing EPS, and the returns to shareholders haven't been wonderful. So while shareholders might not be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before thinking a bump in pay is in order.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Ajanta Pharma that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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