Key Things To Understand About Unichem Laboratories' (NSE:UNICHEMLAB) CEO Pay Cheque

Prakash Mody has been the CEO of Unichem Laboratories Limited (NSE:UNICHEMLAB) since 2003, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Unichem Laboratories.

See our latest analysis for Unichem Laboratories

Comparing Unichem Laboratories Limited's CEO Compensation With the industry

Our data indicates that Unichem Laboratories Limited has a market capitalization of ₹17b, and total annual CEO compensation was reported as ₹54m for the year to March 2020. Notably, that's an increase of 31% over the year before. In particular, the salary of ₹42.5m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from ₹7.4b to ₹30b, we found that the median CEO total compensation was ₹18m. This suggests that Prakash Mody is paid more than the median for the industry. Furthermore, Prakash Mody directly owns ₹8.4b worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 99% of total compensation out of all the companies we analyzed, while other remuneration made up 1.3% of the pie. In Unichem Laboratories' 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.

Unichem Laboratories Limited's Growth

Over the last three years, Unichem Laboratories Limited has shrunk its earnings per share by 1.1% per year. It achieved revenue growth of 2.8% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in 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 Unichem Laboratories Limited Been A Good Investment?

With a three year total loss of 15% for the shareholders, Unichem Laboratories Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Unichem Laboratories Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Unichem Laboratories you should be aware of, and 1 of them is a bit unpleasant.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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