How Should Investors React To RingCentral, Inc.'s (NYSE:RNG) CEO Pay?
Vlad Shmunis has been the CEO of RingCentral, Inc. (NYSE:RNG) since 1999. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for RingCentral
How Does Vlad Shmunis's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that RingCentral, Inc. has a market cap of US$20b, and reported total annual CEO compensation of US$7.9m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$544k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$12m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of RingCentral. On a sector level, around 13% of total compensation represents salary and 87% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for RingCentral, in sharp contrast to the overall sector.
Most shareholders would consider it a positive that Vlad Shmunis takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at RingCentral, below.
Is RingCentral, Inc. Growing?
On average over the last three years, RingCentral, Inc. has shrunk earnings per share by 38% each year (measured with a line of best fit). It achieved revenue growth of 34% over the last year.
Investors should note that, over three years, earnings per share are down. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. 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 RingCentral, Inc. Been A Good Investment?
Most shareholders would probably be pleased with RingCentral, Inc. for providing a total return of 584% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
It looks like RingCentral, Inc. pays its CEO less than the average at large companies.
It's well worth noting that while Vlad Shmunis is paid below what is normal at large companies, the returns have been very pleasing, over the last three years. Although we could see higher growth, we'd argue the remuneration is modest, based on these observations. Taking a breather from CEO compensation, we've spotted 4 warning signs for RingCentral (of which 1 is potentially serious!) you should know about in order to have a holistic understanding of the stock.
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.
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