Stock Analysis
Here's Why It's Unlikely That Laurus Labs Limited's (NSE:LAURUSLABS) CEO Will See A Pay Rise This Year
Key Insights
- Laurus Labs' Annual General Meeting to take place on 11th of July
- CEO Satyanarayana Chava's total compensation includes salary of ₹108.6m
- The overall pay is 101% above the industry average
- Laurus Labs' EPS declined by 45% over the past three years while total shareholder loss over the past three years was 33%
The results at Laurus Labs Limited (NSE:LAURUSLABS) have been quite disappointing recently and CEO Satyanarayana Chava bears some responsibility for this. At the upcoming AGM on 11th of July, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.
See our latest analysis for Laurus Labs
Comparing Laurus Labs Limited's CEO Compensation With The Industry
Our data indicates that Laurus Labs Limited has a market capitalization of ₹245b, and total annual CEO compensation was reported as ₹135m for the year to March 2024. Notably, that's a decrease of 28% over the year before. Notably, the salary which is ₹108.6m, represents most of the total compensation being paid.
On comparing similar companies from the Indian Pharmaceuticals industry with market caps ranging from ₹167b to ₹534b, we found that the median CEO total compensation was ₹67m. Accordingly, our analysis reveals that Laurus Labs Limited pays Satyanarayana Chava north of the industry median. What's more, Satyanarayana Chava holds ₹126m 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 | ₹109m | ₹99m | 81% |
Other | ₹26m | ₹88m | 19% |
Total Compensation | ₹135m | ₹186m | 100% |
Talking in terms of the industry, salary represented approximately 98% of total compensation out of all the companies we analyzed, while other remuneration made up 2% of the pie. In Laurus Labs' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Laurus Labs Limited's Growth
Over the last three years, Laurus Labs Limited has shrunk its earnings per share by 45% per year. It saw its revenue drop 17% over the last year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Laurus Labs Limited Been A Good Investment?
The return of -33% over three years would not have pleased Laurus Labs Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Laurus Labs (1 is a bit unpleasant!) that you should be aware of before investing here.
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.
New: AI Stock Screener & Alerts
Our new AI Stock Screener scans the market every day to uncover opportunities.
• Dividend Powerhouses (3%+ Yield)
• Undervalued Small Caps with Insider Buying
• High growth Tech and AI Companies
Or build your own from over 50 metrics.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
About NSEI:LAURUSLABS
Laurus Labs
Manufactures and sells medicines and active pharmaceutical ingredients (APIs) in India and internationally.