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How Should Investors React To Otelco Inc.'s (NASDAQ:OTEL) CEO Pay?

Simply Wall St

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Rob Souza became the CEO of Otelco Inc. (NASDAQ:OTEL) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Otelco

How Does Rob Souza's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Otelco Inc. has a market cap of US$59m, and is paying total annual CEO compensation of US$532k. (This number is for the twelve months until December 2018). That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$350k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$437k.

That means Rob Souza receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Otelco, below.

NasdaqCM:OTEL CEO Compensation, May 9th 2019

Is Otelco Inc. Growing?

On average over the last three years, Otelco Inc. has grown earnings per share (EPS) by 27% each year (using a line of best fit). In the last year, its revenue is down -3.6%.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Otelco Inc. Been A Good Investment?

Most shareholders would probably be pleased with Otelco Inc. for providing a total return of 299% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Remuneration for Rob Souza is close enough to the median pay for a CEO of a similar sized company .

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. So one could argue the CEO compensation is quite modest, if you consider company performance! So you may want to check if insiders are buying Otelco shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.