How Should Investors Feel About Subex's (NSE:SUBEX) CEO Remuneration?

Vinod Padmanabhan became the CEO of Subex Limited (NSE:SUBEX) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Subex

How Does Total Compensation For Vinod Padmanabhan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Subex Limited has a market capitalization of ₹7.2b, and reported total annual CEO compensation of ₹5.7m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary of ₹5.7m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.8m. From this we gather that Vinod Padmanabhan is paid around the median for CEOs in the industry. Furthermore, Vinod Padmanabhan directly owns ₹5.8m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 100% of total compensation represents salary, while the remainder of 0.5% is other remuneration. On a company level, Subex prefers to reward its CEO through a salary, opting not to pay Vinod Padmanabhan through non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Subex Limited's Growth Numbers

Over the last three years, Subex Limited has shrunk its earnings per share by 69% per year. In the last year, its revenue is up 6.7%.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Subex Limited Been A Good Investment?

Most shareholders would probably be pleased with Subex Limited for providing a total return of 55% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Subex pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Subex pays its CEO in line with similar-sized companies belonging to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We wouldn't say CEO compensation is too high, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Subex you should be aware of, and 1 of them shouldn't be ignored.

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.

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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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