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Is Neuland Laboratories Limited (NSE:NEULANDLAB) Excessively Paying Its CEO?

Simply Wall St

Davuluri Rao became the CEO of Neuland Laboratories Limited ( NSE:NEULANDLAB ) in 2013. 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. 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.

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Check out our latest analysis for Neuland Laboratories

How Does Davuluri Rao's Compensation Compare With Similar Sized Companies?

Our data indicates that Neuland Laboratories Limited is worth ₹8.6b, and total annual CEO compensation is ₹5.0m. (This figure is for the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at ₹3.3m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.3m.

It would therefore appear that Neuland Laboratories Limited pays Davuluri Rao more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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.

The graphic below shows how CEO compensation at Neuland Laboratories has changed from year to year.

NSEI:NEULANDLAB CEO Compensation, May 20th 2019

Is Neuland Laboratories Limited Growing?

Neuland Laboratories Limited has reduced its earnings per share by an average of 35% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 27%.

The reduction in earnings per share, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future .

Has Neuland Laboratories Limited Been A Good Investment?

Since shareholders would have lost about 20% over three years, some Neuland Laboratories 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 the total CEO remuneration paid by Neuland Laboratories Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. 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. So you may want to check if insiders are buying Neuland Laboratories shares with their own money (free access).

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.