What Can We Conclude About Subex's (NSE:SUBEXLTD) CEO Pay?

Vinod Padmanabhan became the CEO of Subex Limited (NSE:SUBEXLTD) 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Subex.

View 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 ₹14b, and reported total annual CEO compensation of ₹5.7m for the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary of ₹5.7m is the entirety of the CEO compensation.

On examining similar-sized companies in the industry with market capitalizations between ₹7.3b and ₹29b, we discovered that the median CEO total compensation of that group was ₹28m. In other words, Subex pays its CEO lower than the industry median. Furthermore, Vinod Padmanabhan directly owns ₹12m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Speaking on a company level, Subex prefers to tread along a traditional path, disbursing all compensation through a salary. 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 83% per year. It achieved revenue growth of 9.6% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph 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 151% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Subex pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Subex Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And although the company is suffering from declining EPS growth over the past three years, shareholder returns remain strong. So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Subex you should be aware of, and 1 of them doesn't sit too well with us.

Important note: Subex 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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