Shareholders Will Probably Hold Off On Increasing Glenmark Pharmaceuticals Limited's (NSE:GLENMARK) CEO Compensation For The Time Being

Key Insights

• Glenmark Pharmaceuticals' Annual General Meeting to take place on 29th of September
• CEO Glenn Saldanha's total compensation includes salary of ₹129.8m
• The overall pay is 96% above the industry average
• Glenmark Pharmaceuticals' total shareholder return over the past three years was 69% while its EPS was down 35% over the past three years

Despite strong share price growth of 69% for Glenmark Pharmaceuticals Limited (NSE:GLENMARK) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29th of September. 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Glenmark Pharmaceuticals

Comparing Glenmark Pharmaceuticals Limited's CEO Compensation With The Industry

According to our data, Glenmark Pharmaceuticals Limited has a market capitalization of ₹227b, and paid its CEO total annual compensation worth ₹162m over the year to March 2023. That is, the compensation was roughly the same as last year. In particular, the salary of ₹129.8m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Indian Pharmaceuticals industry with market capitalizations ranging between ₹166b and ₹531b had a median total CEO compensation of ₹83m. Hence, we can conclude that Glenn Saldanha is remunerated higher than the industry median. Furthermore, Glenn Saldanha directly owns ₹790m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹130m	₹130m	80%
Other	₹32m	₹28m	20%
Total Compensation	₹162m	₹158m	100%

On an industry level, roughly 96% of total compensation represents salary and 4% is other remuneration. Glenmark Pharmaceuticals pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Glenmark Pharmaceuticals Limited's Growth

Over the last three years, Glenmark Pharmaceuticals Limited has shrunk its earnings per share by 35% per year. It achieved revenue growth of 12% over the last year.

The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Glenmark Pharmaceuticals Limited Been A Good Investment?

Most shareholders would probably be pleased with Glenmark Pharmaceuticals Limited for providing a total return of 69% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Glenmark 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.

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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.