Is ClearOne, Inc.’s (NASDAQ:CLRO) CEO Salary Justified?

Zee Hakimoglu has been the CEO of ClearOne, Inc. (NASDAQ:CLRO) since 2004. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for ClearOne

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

Our data indicates that ClearOne, Inc. is worth US$29m, and total annual CEO compensation was reported as US$355k for the year to December 2018. Notably, the salary of US$355k is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$509k.

A first glance this seems like a real positive for shareholders, since Zee Hakimoglu is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at ClearOne has changed from year to year.

NasdaqCM:CLRO CEO Compensation, December 9th 2019
NasdaqCM:CLRO CEO Compensation, December 9th 2019

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.

Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has ClearOne, Inc. Been A Good Investment?

Given the total loss of 83% over three years, many shareholders in ClearOne, Inc. are probably rather dissatisfied, to say the least. 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.

Zee Hakimoglu is paid less than CEOs of similar size companies, but the company isn’t growing and total shareholder returns have been disappointing. Considering all these factors, we’d stop short of saying the CEO pay is too high, but we don’t think shareholders would want to see a pay rise before business performance improves. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling ClearOne (free visualization of insider trades).

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 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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