Stock Analysis

We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Alembic Pharmaceuticals Limited's (NSE:APLLTD) CEO For Now

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Despite positive share price growth of 19% for Alembic Pharmaceuticals Limited (NSE:APLLTD) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 11 November 2022. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Alembic Pharmaceuticals

How Does Total Compensation For Chirayu Amin Compare With Other Companies In The Industry?

According to our data, Alembic Pharmaceuticals Limited has a market capitalization of ₹129b, and paid its CEO total annual compensation worth ₹280m over the year to March 2022. We note that's a decrease of 11% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹80m.

For comparison, other companies in the same industry with market capitalizations ranging between ₹83b and ₹265b had a median total CEO compensation of ₹99m. This suggests that Chirayu Amin is paid more than the median for the industry. What's more, Chirayu Amin holds ₹3.0b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20222021Proportion (2022)
Salary ₹80m ₹65m 29%
Other ₹200m ₹250m 71%
Total Compensation₹280m ₹315m100%

On an industry level, around 92% of total compensation represents salary and 8% is other remuneration. Alembic Pharmaceuticals sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NSEI:APLLTD CEO Compensation November 5th 2022

Alembic Pharmaceuticals Limited's Growth

Over the last three years, Alembic Pharmaceuticals Limited has shrunk its earnings per share by 21% per year. In the last year, its revenue is down 2.5%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Alembic Pharmaceuticals Limited Been A Good Investment?

Alembic Pharmaceuticals Limited has served shareholders reasonably well, with a total return of 19% 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.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Alembic Pharmaceuticals that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

Valuation is complex, but we're helping make it simple.

Find out whether Alembic Pharmaceuticals is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.