Should You Worry About Hikal Limited's (NSE:HIKAL) CEO Salary Level?

Sameer Hiremath became the CEO of Hikal Limited (NSE:HIKAL) in 2011. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Hikal

How Does Sameer Hiremath's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Hikal Limited has a market cap of ₹7.8b, and reported total annual CEO compensation of ₹37m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹22m. We looked at a group of companies with market capitalizations under ₹15b, and the median CEO total compensation was ₹3.7m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 99% of total compensation represents salary and 0.9% is other remuneration. Hikal sets aside a smaller share of compensation for salary, in comparison to the overall industry.

It would therefore appear that Hikal Limited pays Sameer Hiremath more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see a visual representation of the CEO compensation at Hikal, below.

Is Hikal Limited Growing?

Hikal Limited has seen earnings per share (EPS) move positively by an average of 14% a year, over the last three years (using a line of best fit). It achieved revenue growth of 4.5% over the last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.

Has Hikal Limited Been A Good Investment?

Given the total loss of 52% over three years, many shareholders in Hikal Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Hikal Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Moving away from CEO compensation for the moment, we've identified 3 warning signs for Hikal that you should be aware of before investing.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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