How Should Investors React To ClearOne, Inc.’s (NASDAQ:CLRO) CEO Pay?

Zee Hakimoglu became the CEO of ClearOne, Inc. (NASDAQ:CLRO) in 2004. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for ClearOne

How Does Zee Hakimoglu’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that ClearOne, Inc. has a market cap of US$35m, and reported total annual CEO compensation of US$355k for the year to December 2018. Notably, the salary of US$355k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$616k.

Now let’s take a look at the pay mix on an industry and company level to gain a better understanding of where ClearOne stands. On a sector level, around 27% of total compensation represents salary and 73% is other remuneration. It’s interesting to note that ClearOne pays out a greater portion of remuneration through salary, in comparison to the wider industry.

This would give shareholders a good impression of the company, since most similar size companies have to 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. You can see, below, how CEO compensation at ClearOne has changed over time.

NasdaqCM:CLRO CEO Compensation, March 23rd 2020
NasdaqCM:CLRO CEO Compensation, March 23rd 2020

Is ClearOne, Inc. Growing?

ClearOne, Inc. has reduced its earnings per share by an average of 53% a year, over the last three years (measured with a line of best fit). Its revenue is down 14% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don’t have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has ClearOne, Inc. Been A Good Investment?

With a three year total loss of 79%, ClearOne, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

ClearOne, Inc. is currently paying its CEO below what is normal for companies of its size.

Shareholders should note that compensation for Zee Hakimoglu is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. On another note, ClearOne has 3 warning signs (and 2 which make us uncomfortable) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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