Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Potluri Babu became the CEO of SMS Pharmaceuticals Limited (NSE:SMSPHARMA) in 1990. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Potluri Babu's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that SMS Pharmaceuticals Limited has a market cap of ₹3.9b, and is paying total annual CEO compensation of ₹32m. (This number is for the twelve months until March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹20m. We took a group of companies with market capitalizations below ₹14b, and calculated the median CEO total compensation to be ₹1.4m.
As you can see, Potluri Babu is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean SMS Pharmaceuticals Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at SMS Pharmaceuticals has changed from year to year.
Is SMS Pharmaceuticals Limited Growing?
Over the last three years, SMS Pharmaceuticals Limited has not seen its earnings per share change much, though there is a positive trend. Revenue was pretty flat on last year.
I'd prefer higher revenue growth, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has SMS Pharmaceuticals Limited Been A Good Investment?
Since shareholders would have lost about 47% over three years, some SMS Pharmaceuticals Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount SMS Pharmaceuticals Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Shareholders may want to check for free if SMS Pharmaceuticals insiders are buying or selling shares.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.