In 2013, Vik Verma was appointed CEO of 8×8, Inc. (NYSE:EGHT). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Vik Verma’s Compensation Compare With Similar Sized Companies?
Our data indicates that 8×8, Inc. is worth US$1.8b, and total annual CEO compensation was reported as US$5.1m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$490k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.8m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. So it seems like there isn’t a significant difference between 8×8 and the broader market, in terms of salary allocation in the overall compensation package.
That means Vik Verma receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance. The graphic below shows how CEO compensation at 8×8 has changed from year to year.
Is 8×8, Inc. Growing?
Over the last three years 8×8, Inc. has shrunk its earnings per share by an average of 58% per year (measured with a line of best fit). In the last year, its revenue is up 24%.
Few shareholders would be pleased to read that earnings per share are lower over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has 8×8, Inc. Been A Good Investment?
8×8, Inc. has served shareholders reasonably well, with a total return of 31% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
Vik Verma is paid around the same as most CEOs of similar size companies.
We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We’re not saying the CEO pay is too generous, but we’d venture the company should look to improve its business metrics (and share price) before paying any more. Looking into other areas, we’ve picked out 3 warning signs for 8×8 that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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