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Ebix CEO Takes Stock as Salary Instead of Cash Amid Share Price Declines

GuruFocus founder Charlie Tian has Ebix as one of his largest holdings

January 11, 2019 | About:

Ebix Inc. (NASDAQ:EBIX) CEO Robin Raina decided to forgo his cash salary and instead accept Ebix stock of equivalent value every month, according to a press release this morning. Ebix stock was traded above $80 three months ago. It has since lost almost 50%. This is the related content of the press release:

“CEO Salary - The Company Compensation Committee accepted the Ebix CEO Robin Raina’s request to forego his cash salary and instead accept Ebix stock for equivalent value every month, at the stock price prevailing at that time in the market. Ebix CEO will receive stock instead of cash for a period of time, until the stock price is $150 per share or the economic equivalent as adjusted for future corporate actions such as stock splits that may occur from time to time.”

Raina’s total compensation was $5.7 million in 2018. This will translate into more than 100,000 shares if the stock stays at the current level. Raina already owns more than 3.8 million shares, or more than 12% of the company.

The software maker's stock is up more than 4% on the news.

Ebix has also been taking advantage of the low stock prices and buying back shares:

“Since October 1, 2018, Ebix has repurchased 1.06 million shares of its common stock for an aggregate amount of $49.6 million, including 200,000 shares repurchased from the Rennes Foundation in an arms-length transaction at a 2% discount to the market price on that date. Based on all repurchase to date, Ebix expects its diluted share count for Q1 2019 to be approximately 30.63 million,” the release stated.

This is in strong contrast to what the company did in the previous quarter. It did not repurchase any shares during the quarter ended Sept. 30, 2018, when the stock price was about twice as high. This is a very strong indication that the company has been very rational in its stock repurchases. Over the past five years, the company has retired about a quarter of its total shares.

Ebix stock has been under short attack in almost all of the last six years, and the short interest has been high. But in the mean time the company has been able to expand its business through organic growth and acquisitions, and generate tremendous amounts of free cash flow to buy back shares.

The stock appears to be undervalued considering its great potential in growing its earnings. This the Peter Lynch Chart of Ebix:


GuruFocus founder Charlie Tian has written multiple times about Ebix, as it is one of his largest holdings. His wrote that it is a long-term winner in 2016, and a deep bargain in 2013. His average cost was about $13 a share, and it is still one of his largest holdings.

  • CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
  • Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
  • Double Buys:: Companies that both Gurus and Insiders are buying
  • Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.

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About the author:

Charlie Tian, Ph.D., is the founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

Rating: 4.8/5 (5 votes)



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