Ed Meyercord became the CEO of Extreme Networks, Inc. (NASDAQ:EXTR) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Ed Meyercord's Compensation Compare With Similar Sized Companies?
Our data indicates that Extreme Networks, Inc. is worth US$850m, and total annual CEO compensation was reported as US$3.7m for the year to June 2019. That's actually a decrease on the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$625k. 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$400m to US$1.6b, and the median CEO total compensation was US$2.6m.
It would therefore appear that Extreme Networks, Inc. pays Ed Meyercord more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Extreme Networks has changed over time.
Is Extreme Networks, Inc. Growing?
On average over the last three years, Extreme Networks, Inc. has shrunk earnings per share by 28% each year (measured with a line of best fit). Revenue was pretty flat on last year.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Extreme Networks, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Extreme Networks, Inc. for providing a total return of 39% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Extreme Networks, 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.
We think many shareholders would be underwhelmed with the business growth over the last three years. But clearly there are some positives, because investors have done well over the same time frame. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Extreme Networks shares (free trial).
If you want to buy a stock that is better than Extreme Networks, this free list of high return, low debt companies is a great place to look.
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