How Should Investors Feel About Oppenheimer Holdings' (NYSE:OPY) CEO Remuneration?
Bud Lowenthal became the CEO of Oppenheimer Holdings Inc. (NYSE:OPY) in 1985, 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 Oppenheimer Holdings.
See our latest analysis for Oppenheimer Holdings
How Does Total Compensation For Bud Lowenthal Compare With Other Companies In The Industry?
According to our data, Oppenheimer Holdings Inc. has a market capitalization of US$295m, and paid its CEO total annual compensation worth US$5.9m over the year to December 2019. Notably, that's an increase of 18% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$500k.
In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$2.1m. Accordingly, our analysis reveals that Oppenheimer Holdings Inc. pays Bud Lowenthal north of the industry median. Furthermore, Bud Lowenthal directly owns US$78m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$500k | US$500k | 9% |
Other | US$5.4m | US$4.5m | 91% |
Total Compensation | US$5.9m | US$5.0m | 100% |
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. In Oppenheimer Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Oppenheimer Holdings Inc.'s Growth
Oppenheimer Holdings Inc.'s earnings per share (EPS) grew 50% per year over the last three years. It achieved revenue growth of 7.5% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Oppenheimer Holdings Inc. Been A Good Investment?
Boasting a total shareholder return of 53% over three years, Oppenheimer Holdings Inc. has done well by shareholders. 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...
As we noted earlier, Oppenheimer Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Bud's performance creates value for the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Oppenheimer Holdings that investors should be aware of in a dynamic business environment.
Switching gears from Oppenheimer Holdings, 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.
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