Here's What We Think About Cipla Limited's (NSE:CIPLA) CEO Pay
Umang Vohra has been the CEO of Cipla Limited (NSE:CIPLA) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Cipla
How Does Umang Vohra's Compensation Compare With Similar Sized Companies?
According to our data, Cipla Limited has a market capitalization of ₹367b, and paid its CEO total annual compensation worth ₹150m over the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹20m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from ₹286b to ₹859b, and the median CEO total compensation was ₹92m.
Thus we can conclude that Umang Vohra receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cipla Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Cipla has changed over time.
Is Cipla Limited Growing?
On average over the last three years, Cipla Limited has grown earnings per share (EPS) by 16% each year (using a line of best fit). It achieved revenue growth of 8.6% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has Cipla Limited Been A Good Investment?
Since shareholders would have lost about 16% over three years, some Cipla Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We compared total CEO remuneration at Cipla Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. Whatever your view on compensation, you might want to check if insiders are buying or selling Cipla shares (free trial).
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 editorial-team@simplywallst.com. 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.
