Eric Stang became the CEO of Ooma, Inc. (NYSE:OOMA) in 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. This method should give us information to assess how appropriately the company pays the CEO.
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How Does Eric Stang’s Compensation Compare With Similar Sized Companies?
According to our data, Ooma, Inc. has a market capitalization of US$300m, and pays its CEO total annual compensation worth US$3.1m. (This is based on the year to January 2019). Notably, that’s an increase of 21% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$501k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO total compensation was US$1.1m.
As you can see, Eric Stang is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Ooma, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Ooma has changed over time.
Is Ooma, Inc. Growing?
On average over the last three years, Ooma, Inc. has grown earnings per share (EPS) by 17% each year (using a line of best fit). It achieved revenue growth of 13% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. It could be important to check this free visual depiction of what analysts expect for the future.
Has Ooma, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Ooma, Inc. for providing a total return of 114% over three years. 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.
We examined the amount Ooma, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying Ooma shares with their own money (free access).
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.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.