Shareholders May Be More Conservative With Lyka Labs Limited's (NSE:LYKALABS) CEO Compensation For Now

Key Insights

• Lyka Labs to hold its Annual General Meeting on 9th of August
• CEO Kunal Gandhi's total compensation includes salary of ₹25.8m
• The overall pay is 437% above the industry average
• Over the past three years, Lyka Labs' EPS fell by 68% and over the past three years, the total shareholder return was 29%

Under the guidance of CEO Kunal Gandhi, Lyka Labs Limited (NSE:LYKALABS) has performed reasonably well recently. As shareholders go into the upcoming AGM on 9th of August, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Lyka Labs

How Does Total Compensation For Kunal Gandhi Compare With Other Companies In The Industry?

Our data indicates that Lyka Labs Limited has a market capitalization of ₹4.3b, and total annual CEO compensation was reported as ₹26m for the year to March 2024. Notably, that's an increase of 70% over the year before. Notably, the salary of ₹26m is the entirety of the CEO compensation.

In comparison with other companies in the Indian Pharmaceuticals industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹4.8m. Hence, we can conclude that Kunal Gandhi is remunerated higher than the industry median. What's more, Kunal Gandhi holds ₹293m 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	₹26m	₹15m	100%
Other	-	-	-
Total Compensation	₹26m	₹15m	100%

On an industry level, around 98% of total compensation represents salary and 2% is other remuneration. At the company level, Lyka Labs pays Kunal Gandhi solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Lyka Labs Limited's Growth Numbers

Over the last three years, Lyka Labs Limited has shrunk its earnings per share by 68% per year. In the last year, its revenue is up 19%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Lyka Labs Limited Been A Good Investment?

With a total shareholder return of 29% over three years, Lyka Labs Limited shareholders would, in general, be reasonably content. 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.

In Summary...

Lyka Labs pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The overall company performance has been commendable, however there are still areas for improvement. We still think that some shareholders will be hesitant of increasing CEO pay until EPS growth improves, since they are already paid higher than the industry.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Lyka Labs (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com