Here's What We Think About Tera Software's (NSE:TERASOFT) CEO Pay

Gopi Tummala is the CEO of Tera Software Limited (NSE:TERASOFT), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Tera Software

How Does Total Compensation For Gopi Tummala Compare With Other Companies In The Industry?

Our data indicates that Tera Software Limited has a market capitalization of ₹350m, and total annual CEO compensation was reported as ₹8.4m for the year to March 2020. This means that the compensation hasn't changed much from last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹8.4m.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.0m. Accordingly, our analysis reveals that Tera Software Limited pays Gopi Tummala north of the industry median. Moreover, Gopi Tummala also holds ₹74m worth of Tera Software stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. At the company level, Tera Software pays Gopi Tummala solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Tera Software Limited's Growth

Tera Software Limited has reduced its earnings per share by 13% a year over the last three years. Its revenue is up 32% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Tera Software Limited Been A Good Investment?

With a three year total loss of 48% for the shareholders, Tera Software Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Tera Software pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Gopi is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. At the same time, looking at EPS and total shareholder returns, it's tough to say Tera Software is in a sound position, considering both metrics are down. On a more positive note, the company has produced a more positive revenue growth more recently. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves.

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. That's why we did our research, and identified 3 warning signs for Tera Software (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Tera Software 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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