Hester Biosciences Limited's (NSE:HESTERBIO) CEO Compensation Looks Acceptable To Us And Here's Why

Key Insights

• Hester Biosciences' Annual General Meeting to take place on 29th of August
• Total pay for CEO Rajiv Gandhi includes ₹19.1m salary
• The total compensation is similar to the average for the industry
• Hester Biosciences' total shareholder return over the past three years was 11% while its EPS was down 22% over the past three years

Despite Hester Biosciences Limited's (NSE:HESTERBIO) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29th of August. 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 the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Hester Biosciences

Comparing Hester Biosciences Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Hester Biosciences Limited has a market capitalization of ₹22b, and reported total annual CEO compensation of ₹37m for the year to March 2024. Notably, that's a decrease of 9.7% over the year before. Notably, the salary which is ₹19.1m, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the India Biotechs industry with market caps ranging from ₹8.4b to ₹34b, we found that the median CEO total compensation was ₹37m. From this we gather that Rajiv Gandhi is paid around the median for CEOs in the industry. What's more, Rajiv Gandhi holds ₹2.2b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	₹19m	₹19m	51%
Other	₹18m	₹22m	49%
Total Compensation	₹37m	₹41m	100%

Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. Our data reveals that Hester Biosciences allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Hester Biosciences Limited's Growth

Over the last three years, Hester Biosciences Limited has shrunk its earnings per share by 22% per year. Its revenue is down 3.4% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Hester Biosciences Limited Been A Good Investment?

With a total shareholder return of 11% over three years, Hester Biosciences Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for Hester Biosciences that investors should look into moving forward.

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.