Vik Verma has been the CEO of 8×8, Inc. (NYSE:EGHT) since 2013, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Vik Verma Compare With Other Companies In The Industry?
Our data indicates that 8×8, Inc. has a market capitalization of US$1.5b, and total annual CEO compensation was reported as US$5.7m for the year to March 2020. Notably, that’s an increase of 11% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$513k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$5.0m. So it looks like 8×8 compensates Vik Verma in line with the median for the industry. What’s more, Vik Verma holds US$16m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 11% of total compensation represents salary and 89% is other remuneration. 8×8 pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
8×8, Inc.’s Growth
Over the last three years, 8×8, Inc. has shrunk its earnings per share by 40% per year. In the last year, its revenue is up 29%.
Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It’s hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has 8×8, Inc. Been A Good Investment?
8×8, Inc. has generated a total shareholder return of 7.8% over three years, so most shareholders wouldn’t be too disappointed. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, Vik is compensated close to the median for companies of its size, and which belong to the same industry. But revenue growth over the last year can’t be ignored. Shareholder returns, in comparison, have not been as impressive during the same period. Additionally, shareholders would want to keep their eyes on EPS, since growth has been negative for the metric for the last three years. There’s certainly room for improvement, but CEO compensation seems reasonable, considering the company’s steady performance.
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. That’s why we did some digging and identified 3 warning signs for 8×8 that you should be aware of before investing.
Important note: 8×8 is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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. 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.
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