Most Shareholders Will Probably Find That The Compensation For Panacea Biotec Limited's (NSE:PANACEABIO) CEO Is Reasonable

Key Insights

• Panacea Biotec to hold its Annual General Meeting on 27th of September
• Salary of ₹6.00m is part of CEO Rajesh Jain's total remuneration
• The total compensation is 73% less than the average for the industry
• Panacea Biotec's EPS declined by 21% over the past three years while total shareholder return over the past three years was 9.6%

Performance at Panacea Biotec Limited (NSE:PANACEABIO) has been rather uninspiring recently and shareholders may be wondering how CEO Rajesh Jain plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 27th of September. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Panacea Biotec

Comparing Panacea Biotec Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Panacea Biotec Limited has a market capitalization of ₹19b, and reported total annual CEO compensation of ₹9.0m for the year to March 2024. We note that's an increase of 9.3% above last year. We note that the salary portion, which stands at ₹6.00m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the India Biotechs industry with market capitalizations between ₹8.4b and ₹33b, we discovered that the median CEO total compensation of that group was ₹34m. Accordingly, Panacea Biotec pays its CEO under the industry median. What's more, Rajesh Jain holds ₹9.5b 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	₹6.0m	₹6.0m	67%
Other	₹3.0m	₹2.2m	33%
Total Compensation	₹9.0m	₹8.2m	100%

Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. There isn't a significant difference between Panacea Biotec and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Panacea Biotec Limited's Growth Numbers

Panacea Biotec Limited has reduced its earnings per share by 21% a year over the last three years. In the last year, its revenue is up 14%.

The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Panacea Biotec Limited Been A Good Investment?

Panacea Biotec Limited has not done too badly by shareholders, with a total return of 9.6%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Panacea Biotec you should be aware of, and 1 of them shouldn't be ignored.

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.