Shareholders May Not Be So Generous With Alpa Laboratories Limited's (NSE:ALPA) CEO Compensation And Here's Why

Key Insights

• Alpa Laboratories' Annual General Meeting to take place on 29th of September
• Total pay for CEO Paresh Chawla includes ₹8.40m salary
• The overall pay is 65% above the industry average
• Alpa Laboratories' EPS grew by 49% over the past three years while total shareholder return over the past three years was 167%

CEO Paresh Chawla has done a decent job of delivering relatively good performance at Alpa Laboratories Limited (NSE:ALPA) recently. As shareholders go into the upcoming AGM on 29th of September, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for Alpa Laboratories

Comparing Alpa Laboratories Limited's CEO Compensation With The Industry

Our data indicates that Alpa Laboratories Limited has a market capitalization of ₹1.6b, and total annual CEO compensation was reported as ₹8.4m for the year to March 2023. There was no change in the compensation compared to last year. Notably, the salary of ₹8.4m is the entirety of the CEO compensation.

On comparing similar-sized companies in the Indian Pharmaceuticals industry with market capitalizations below ₹17b, we found that the median total CEO compensation was ₹5.1m. Accordingly, our analysis reveals that Alpa Laboratories Limited pays Paresh Chawla north of the industry median. What's more, Paresh Chawla holds ₹341m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	₹8.4m	₹8.4m	100%
Other	-	-	-
Total Compensation	₹8.4m	₹8.4m	100%

On an industry level, roughly 96% of total compensation represents salary and 4% is other remuneration. On a company level, Alpa Laboratories prefers to reward its CEO through a salary, opting not to pay Paresh Chawla through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Alpa Laboratories Limited's Growth Numbers

Alpa Laboratories Limited's earnings per share (EPS) grew 49% per year over the last three years. It saw its revenue drop 2.8% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Alpa Laboratories Limited Been A Good Investment?

Most shareholders would probably be pleased with Alpa Laboratories Limited for providing a total return of 167% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Alpa Laboratories rewards its CEO solely through a salary, ignoring non-salary benefits completely. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Alpa Laboratories 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. 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.