Vlad Shmunis became the CEO of RingCentral, Inc. (NYSE:RNG) in 1999, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for RingCentral.

See our latest analysis for RingCentral

How Does Total Compensation For Vlad Shmunis Compare With Other Companies In The Industry?

Our data indicates that RingCentral, Inc. has a market capitalization of US$25b, and total annual CEO compensation was reported as US$9.8m for the year to December 2019. Notably, that's an increase of 25% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$141k.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$9.7m. From this we gather that Vlad Shmunis is paid around the median for CEOs in the industry. What's more, Vlad Shmunis holds US$1.6b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. RingCentral has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at RingCentral, Inc.'s Growth Numbers

Over the last three years, RingCentral, Inc. has shrunk its earnings per share by 78% per year. Its revenue is up 32% over the last year.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has RingCentral, Inc. Been A Good Investment?

Most shareholders would probably be pleased with RingCentral, Inc. for providing a total return of 572% 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.

To Conclude...

RingCentral prefers rewarding its CEO through non-salary benefits. As previously discussed, Vlad is compensated close to the median for companies of its size, and which belong to the same industry. The company has logged solid shareholder returns for the past three years. At the same time, revenues are also moving northwards at a healthy pace. On a worrying note, its important to acknowledge that EPS growth has been negative recently. Overall, the company's performance hasn't been that disappointing for us to object the CEO compensation.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for RingCentral that investors should look into moving forward.

Important note: RingCentral is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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