Vlad Shmunis has been the CEO of RingCentral, Inc. (NYSE:RNG) since 1999. First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Vlad Shmunis’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that RingCentral, Inc. has a market cap of US$22b, and reported total annual CEO compensation of US$7.9m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$544k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of RingCentral. On a sector level, around 13% of total compensation represents salary and 87% is other remuneration. RingCentral sets aside a smaller share of compensation for salary, in comparison to the overall industry.
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion. The graphic below shows how CEO compensation at RingCentral has changed from year to year.
Is RingCentral, Inc. Growing?
Over the last three years RingCentral, Inc. has shrunk its earnings per share by an average of 38% per year (measured with a line of best fit). In the last year, its revenue is up 34%.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. It’s hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.
Has RingCentral, Inc. Been A Good Investment?
I think that the total shareholder return of 730%, over three years, would leave most RingCentral, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
RingCentral, Inc. is currently paying its CEO below what is normal for large companies.
Vlad Shmunis is paid less than what is normal at large companies, and the total shareholder return has been pleasing over the last three years. Although we could see higher growth, we’d argue the remuneration is modest, based on these observations. On another note, RingCentral has 4 warning signs (and 1 which is concerning) we think you should know about.
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.