How Should Investors Feel About Rosetta Stone Inc.'s (NYSE:RST) CEO Pay?
In 2016 A. Hass was appointed CEO of Rosetta Stone Inc. (NYSE:RST). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Rosetta Stone
How Does A. Hass's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Rosetta Stone Inc. has a market cap of US$466m, and reported total annual CEO compensation of US$2.5m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$200k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.8m.
As you can see, A. Hass is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Rosetta Stone Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Rosetta Stone has changed from year to year.
Is Rosetta Stone Inc. Growing?
Over the last three years Rosetta Stone Inc. has grown its earnings per share (EPS) by an average of 34% per year (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has Rosetta Stone Inc. Been A Good Investment?
Boasting a total shareholder return of 171% over three years, Rosetta Stone Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We examined the amount Rosetta Stone 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Rosetta Stone.
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 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.
