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Is Overstock.com, Inc. (NASDAQ:OSTK) Overpaying Its CEO?

Simply Wall St

Patrick Byrne became the CEO of Overstock.com, Inc. (NASDAQ:OSTK) in 1999. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Overstock.com

How Does Patrick Byrne's Compensation Compare With Similar Sized Companies?

According to our data, Overstock.com, Inc. has a market capitalization of US$626m, and pays its CEO total annual compensation worth US$137k. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$104k. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.7m.

Most shareholders would consider it a positive that Patrick Byrne takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Overstock.com has changed from year to year.

NasdaqGM:OSTK CEO Compensation, July 24th 2019

Is Overstock.com, Inc. Growing?

Over the last three years Overstock.com, Inc. has shrunk its earnings per share by an average of 102% per year (measured with a line of best fit). In the last year, its revenue changed by just -0.8%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Overstock.com, Inc. Been A Good Investment?

Overstock.com, Inc. has served shareholders reasonably well, with a total return of 11% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

It appears that Overstock.com, Inc. remunerates its CEO below most similar sized companies.

The compensation paid to Patrick Byrne is lower than is usual at similar sized companies. But the business isn't growing earnings per share, and the returns to shareholders haven't been wonderful. There is room for improved company performance, but we don't see the CEO pay as a big issue here. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Overstock.com (free visualization of insider trades).

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.