Shareholders Will Probably Hold Off On Increasing Wockhardt Limited's (NSE:WOCKPHARMA) CEO Compensation For The Time Being

As many shareholders of Wockhardt Limited (NSE:WOCKPHARMA) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 02 August 2021. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Wockhardt

How Does Total Compensation For Murtaza Khorakiwala Compare With Other Companies In The Industry?

According to our data, Wockhardt Limited has a market capitalization of ₹61b, and paid its CEO total annual compensation worth ₹24m over the year to March 2021. There was no change in the compensation compared to last year. Notably, the salary of ₹24m is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations ranging from ₹30b to ₹119b, the reported median CEO total compensation was ₹27m. So it looks like Wockhardt compensates Murtaza Khorakiwala in line with the median for the industry. Furthermore, Murtaza Khorakiwala directly owns ₹124m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹24m	₹24m	100%
Other	-	-	-
Total Compensation	₹24m	₹24m	100%

Talking in terms of the industry, salary represented approximately 92% of total compensation out of all the companies we analyzed, while other remuneration made up 8% of the pie. On a company level, Wockhardt prefers to reward its CEO through a salary, opting not to pay Murtaza Khorakiwala through non-salary benefits. 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 Wockhardt Limited's Growth Numbers

Wockhardt Limited's earnings per share (EPS) grew 18% per year over the last three years. Its revenue is up 9.3% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Wockhardt Limited Been A Good Investment?

With a three year total loss of 7.3% for the shareholders, Wockhardt Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Wockhardt rewards its CEO solely through a salary, ignoring non-salary benefits completely. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Wockhardt you should be aware of, and 2 of them are significant.

Important note: Wockhardt 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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