How Does Panacea Biotec's (NSE:PANACEABIO) CEO Pay Compare With Company Performance?

Sandeep Jain has been the CEO of Panacea Biotec Limited (NSE:PANACEABIO) since 2002, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Panacea Biotec

How Does Total Compensation For Sandeep Jain Compare With Other Companies In The Industry?

At the time of writing, our data shows that Panacea Biotec Limited has a market capitalization of ₹13b, and reported total annual CEO compensation of ₹6.8m for the year to March 2020. That is, the compensation was roughly the same as last year. In particular, the salary of ₹5.52m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from ₹7.3b to ₹29b, the reported median CEO total compensation was ₹39m. In other words, Panacea Biotec pays its CEO lower than the industry median. What's more, Sandeep Jain holds ₹2.2b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. Panacea Biotec is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Panacea Biotec Limited's Growth

Over the last three years, Panacea Biotec Limited has shrunk its earnings per share by 68% per year. Its revenue is up 6.7% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Panacea Biotec Limited Been A Good Investment?

Given the total shareholder loss of 34% over three years, many shareholders in Panacea Biotec Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Panacea Biotec pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Panacea Biotec that investors should look into moving forward.

Important note: Panacea Biotec is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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. 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.
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