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What Can We Make Of Cowen's (NASDAQ:COWN) CEO Compensation?

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This article will reflect on the compensation paid to Jeff Solomon who has served as CEO of Cowen Inc. (NASDAQ:COWN) since 2017. This analysis will also assess whether Cowen pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Cowen

How Does Total Compensation For Jeff Solomon Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cowen Inc. has a market capitalization of US$490m, and reported total annual CEO compensation of US$7.5m for the year to December 2019. Notably, that's an increase of 47% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$950k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$4.3m. This suggests that Jeff Solomon is paid more than the median for the industry. Furthermore, Jeff Solomon directly owns US$9.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$950k

US$950k

13%

Other

US$6.5m

US$4.1m

87%

Total Compensation

US$7.5m

US$5.1m

100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Although there is a difference in how total compensation is set, Cowen more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Cowen Inc.'s Growth Numbers

Over the past three years, Cowen Inc. has seen its earnings per share (EPS) grow by 86% per year. Its revenue is up 24% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Cowen Inc. Been A Good Investment?

Cowen Inc. has served shareholders reasonably well, with a total return of 11% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As previously discussed, Jeff is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed us with its EPS growth, over three years. We also think investor returns are steady over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Cowen (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Cowen, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.