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Should You Worry About Yelp Inc.’s (NYSE:YELP) CEO Salary Level?

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Jeremy Stoppelman has been the CEO of Yelp Inc. (NYSE:YELP) since 2004. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Yelp

How Does Jeremy Stoppelman’s Compensation Compare With Similar Sized Companies?

According to our data, Yelp Inc. has a market capitalization of US$3.2b, and pays its CEO total annual compensation worth US$10m. (This figure is for the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO compensation of that group was US$4.8m.

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Thus we can conclude that Jeremy Stoppelman receives more in total compensation than the median of a group of companies in the same market, and of similar size to Yelp Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Yelp has changed over time.

NYSE:YELP CEO Compensation February 16th 19
NYSE:YELP CEO Compensation February 16th 19

Is Yelp Inc. Growing?

Yelp Inc. has increased its earnings per share (EPS) by an average of 110% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 11%.

This demonstrates that the company has been improving recently. A good result. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.

Has Yelp Inc. Been A Good Investment?

I think that the total shareholder return of 118%, over three years, would leave most Yelp Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

We compared the total CEO remuneration paid by Yelp 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.

However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Yelp (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.

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.