City Union Bank Limited's (NSE:CUB) CEO Might Not Expect Shareholders To Be So Generous This Year

Shareholders will probably not be too impressed with the underwhelming results at City Union Bank Limited (NSE:CUB) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 19 August 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for City Union Bank

Comparing City Union Bank Limited's CEO Compensation With the industry

At the time of writing, our data shows that City Union Bank Limited has a market capitalization of ₹112b, and reported total annual CEO compensation of ₹25m for the year to March 2021. Notably, that's a decrease of 12% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹9.0m.

On comparing similar companies from the same industry with market caps ranging from ₹74b to ₹238b, we found that the median CEO total compensation was ₹3.0m. Accordingly, our analysis reveals that City Union Bank Limited pays N. V. Kamakodi north of the industry median. Moreover, N. V. Kamakodi also holds ₹368m worth of City Union Bank stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	₹9.0m	₹11m	36%
Other	₹16m	₹18m	64%
Total Compensation	₹25m	₹29m	100%

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. In City Union Bank's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at City Union Bank Limited's Growth Numbers

Over the last three years, City Union Bank Limited has shrunk its earnings per share by 1.4% per year. Its revenue is up 13% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 City Union Bank Limited Been A Good Investment?

Given the total shareholder loss of 16% over three years, many shareholders in City Union Bank Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling City Union Bank (free visualization of insider trades).

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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