Does Vonage Holdings Corp.'s (NYSE:VG) CEO Salary Reflect Performance?
Alan Masarek has been the CEO of Vonage Holdings Corp. (NYSE:VG) since 2014. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Vonage Holdings
How Does Alan Masarek's Compensation Compare With Similar Sized Companies?
Our data indicates that Vonage Holdings Corp. is worth US$2.9b, and total annual CEO compensation was reported as US$9.1m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$875k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
It would therefore appear that Vonage Holdings Corp. pays Alan Masarek 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. 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 Vonage Holdings has changed over time.
Is Vonage Holdings Corp. Growing?
Vonage Holdings Corp. has reduced its earnings per share by an average of 24% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 9.0% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Vonage Holdings Corp. Been A Good Investment?
I think that the total shareholder return of 87%, over three years, would leave most Vonage Holdings Corp. shareholders smiling. 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 examined the amount Vonage Holdings Corp. 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.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Vonage Holdings shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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. Thank you for reading.
