U.S. Markets closed

Is GTT Communications, Inc.'s (NYSE:GTT) CEO Salary Justified?

Simply Wall St

Rick Calder has been the CEO of GTT Communications, Inc. (NYSE:GTT) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.

Check out our latest analysis for GTT Communications

How Does Rick Calder's Compensation Compare With Similar Sized Companies?

According to our data, GTT Communications, Inc. has a market capitalization of US$603m, and paid its CEO total annual compensation worth US$9.2m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$575k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.6m.

Thus we can conclude that Rick Calder receives more in total compensation than the median of a group of companies in the same market, and of similar size to GTT Communications, Inc.. However, this doesn't necessarily mean the pay 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 GTT Communications has changed over time.

NYSE:GTT CEO Compensation, December 31st 2019

Is GTT Communications, Inc. Growing?

On average over the last three years, GTT Communications, Inc. has shrunk earnings per share by 73% each year (measured with a line of best fit). Its revenue is up 37% over last year.

The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has GTT Communications, Inc. Been A Good Investment?

Since shareholders would have lost about 63% over three years, some GTT Communications, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by GTT Communications, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Shareholders may want to check for free if GTT Communications insiders are buying or selling shares.

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.

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. Thank you for reading.