We Think The Compensation For Ami Organics Limited's (NSE:AMIORG) CEO Looks About Right

Key Insights

• Ami Organics' Annual General Meeting to take place on 20th of September
• Total pay for CEO Naresh Patel includes ₹48.0m salary
• The total compensation is similar to the average for the industry
• Over the past three years, Ami Organics' EPS fell by 20% and over the past three years, the total shareholder return was 25%

Under the guidance of CEO Naresh Patel, Ami Organics Limited (NSE:AMIORG) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 20th of September. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Ami Organics

How Does Total Compensation For Naresh Patel Compare With Other Companies In The Industry?

According to our data, Ami Organics Limited has a market capitalization of ₹62b, and paid its CEO total annual compensation worth ₹48m over the year to March 2024. That is, the compensation was roughly the same as last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹48m.

For comparison, other companies in the Indian Pharmaceuticals industry with market capitalizations ranging between ₹34b and ₹134b had a median total CEO compensation of ₹37m. From this we gather that Naresh Patel is paid around the median for CEOs in the industry. Furthermore, Naresh Patel directly owns ₹12b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹48m	₹47m	100%
Other	-	-	-
Total Compensation	₹48m	₹47m	100%

Speaking on an industry level, nearly 98% of total compensation represents salary, while the remainder of 2% is other remuneration. At the company level, Ami Organics pays Naresh Patel solely through a salary, preferring to go down a conventional route. 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 Ami Organics Limited's Growth Numbers

Ami Organics Limited has reduced its earnings per share by 20% a year over the last three years. It achieved revenue growth of 18% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Ami Organics Limited Been A Good Investment?

Ami Organics Limited has generated a total shareholder return of 25% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Ami Organics rewards its CEO solely through a salary, ignoring non-salary benefits completely. The overall company performance has been commendable, however there are still areas for improvement. Still, we think that until shareholders see an improvement in EPS growth, they may find it hard to justify a pay rise for the CEO.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Ami Organics that investors should look into moving forward.

Important note: Ami Organics is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.