Key Insights

• PubMatic will host its Annual General Meeting on 31st of May
• CEO Rajeev Goel's total compensation includes salary of US$610.0k
• The overall pay is 82% above the industry average
• PubMatic's EPS declined by 19% over the past three years while total shareholder loss over the past three years was 20%

Shareholders will probably not be too impressed with the underwhelming results at PubMatic, Inc. (NASDAQ:PUBM) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 31st of May. 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. We present the case why we think CEO compensation is out of sync with company performance.

How Does Total Compensation For Rajeev Goel Compare With Other Companies In The Industry?

At the time of writing, our data shows that PubMatic, Inc. has a market capitalization of US$1.1b, and reported total annual CEO compensation of US$10m for the year to December 2023. That's a notable increase of 38% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$610k.

On comparing similar companies from the American Media industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$5.6m. This suggests that Rajeev Goel is paid more than the median for the industry. What's more, Rajeev Goel holds US$65m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. In PubMatic'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.

PubMatic, Inc.'s Growth

PubMatic, Inc. has reduced its earnings per share by 19% a year over the last three years. Its revenue is up 8.2% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has PubMatic, Inc. Been A Good Investment?

Since shareholders would have lost about 20% over three years, some PubMatic, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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 a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for PubMatic that investors should look into moving forward.

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. 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.