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Is Otelco Inc. (NASDAQ:OTEL) Overpaying Its CEO?

Rob Souza has been the CEO of Otelco Inc. (NASDAQ:OTEL) since 2015. 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 – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Otelco

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

According to our data, Otelco Inc. has a market capitalization of US$55m, and pays its CEO total annual compensation worth US$543k. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$350k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$301k.

Thus we can conclude that Rob Souza receives more in total compensation than the median of a group of companies in the same market, and of similar size to Otelco Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

NasdaqCM:OTEL CEO Compensation December 12th 18

Is Otelco Inc. Growing?

Over the last three years Otelco Inc. has grown its earnings per share (EPS) by an average of 29% per year. Its revenue is down -2.8% over last year.

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?

Boasting a total shareholder return of 141% over three years, Otelco Inc. has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO is paid more than is normal for a company of its size.

In Summary…

We compared the total CEO remuneration paid by Otelco 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.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Otelco shares (free trial).

Or you might prefer examine intently this intuitive graph showing past earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.