Why We Think Panacea Biotec Limited's (NSE:PANACEABIO) CEO Compensation Is Not Excessive At All

Key Insights

• Panacea Biotec's Annual General Meeting to take place on 29th of September
• Salary of ₹6.00m is part of CEO Rajesh Jain's total remuneration
• The total compensation is 77% less than the average for the industry
• Panacea Biotec's EPS grew by 74% over the past three years while total shareholder loss over the past three years was 20%

Shareholders may be wondering what CEO Rajesh Jain plans to do to improve the less than great performance at Panacea Biotec Limited (NSE:PANACEABIO) recently. At the next AGM coming up on 29th of September, they can influence managerial decision making through voting on resolutions, including executive remuneration. 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 think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Panacea Biotec

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

Our data indicates that Panacea Biotec Limited has a market capitalization of ₹9.6b, and total annual CEO compensation was reported as ₹8.2m for the year to March 2023. That's just a smallish increase of 6.0% on last year. Notably, the salary which is ₹6.00m, represents most of the total compensation being paid.

For comparison, other companies in the India Biotechs industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹36m. In other words, Panacea Biotec pays its CEO lower than the industry median. Furthermore, Rajesh Jain directly owns ₹4.7b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹6.0m	₹6.0m	73%
Other	₹2.2m	₹1.8m	27%
Total Compensation	₹8.2m	₹7.8m	100%

On an industry level, roughly 59% of total compensation represents salary and 41% 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 past three years, Panacea Biotec Limited has seen its earnings per share (EPS) grow by 74% per year. In the last year, its revenue is down 25%.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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?

With a three year total loss of 20% for the shareholders, Panacea Biotec Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Panacea Biotec that investors should be aware of in a dynamic business environment.

Switching gears from Panacea Biotec, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.