Eric Stang has been the CEO of Ooma, Inc. (NYSE:OOMA) since 2009. 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. 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.
See our latest analysis for Ooma
How Does Eric Stang's Compensation Compare With Similar Sized Companies?
According to our data, Ooma, Inc. has a market capitalization of US$275m, and paid its CEO total annual compensation worth US$3.1m over the year to January 2019. While we always look at total compensation first, we note that the salary component is less, at US$501k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.1m.
It would therefore appear that Ooma, Inc. pays Eric Stang more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Ooma, below.
Is Ooma, Inc. Growing?
Over the last three years Ooma, Inc. has shrunk its earnings per share by an average of 5.9% per year (measured with a line of best fit). In the last year, its revenue is up 17%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Ooma, Inc. Been A Good Investment?
Boasting a total shareholder return of 39% over three years, Ooma, Inc. has done well by shareholders. 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.
In Summary...
We compared total CEO remuneration at Ooma, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. However, we can't argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Ooma shares (free trial).
Important note: Ooma may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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