Yes I agree, they need to be on a tighter leash.
Dalecox: seems it's also only 10% of their net (not gross) profit. If you hurt them badly enough before subjugation, they may be making less than 10k profit (may in fact be in the red), in which case you get <1k cash, and otherwise no tangible benefits from subjugation. (On the other hand, you don't seem to need to DO anything FOR them either, that is, you as subjugator do not appear to need to offer protection or something.)
My only explanation for the apparently incredible tameness of subjugation is that the devs believed it might be an option for the player herself (to buy some time, to get out of a war they could otherwise not afford to bargain their way out of). I have never tried it, but I could imagine that this might be an option; if so, then keeping subjugation so incredibly tame gives the player a chance to come back and win, whereas if subjugation were that which we all imagine it should be, it would be tantamount to game over. With that said, I'd still prefer it to be much tougher.