Cooper-Standard Holdings Inc.'s (NYSE:CPS) CEO Might Not Expect Shareholders To Be So Generous This Year

The results at Cooper-Standard Holdings Inc. (NYSE:CPS) have been quite disappointing recently and CEO Jeff Edwards bears some responsibility for this. At the upcoming AGM on 20 May 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Cooper-Standard Holdings

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

At the time of writing, our data shows that Cooper-Standard Holdings Inc. has a market capitalization of US$514m, and reported total annual CEO compensation of US$4.9m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

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$303k. Accordingly, our analysis reveals that Cooper-Standard Holdings Inc. pays Jeff Edwards north of the industry median. Furthermore, Jeff Edwards directly owns US$4.0m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$1.0m	US$1.0m	21%
Other	US$3.9m	US$4.1m	79%
Total Compensation	US$4.9m	US$5.1m	100%

Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. Although there is a difference in how total compensation is set, Cooper-Standard Holdings more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Cooper-Standard Holdings Inc.'s Growth

Cooper-Standard Holdings Inc. has reduced its earnings per share by 105% a year over the last three years. In the last year, its revenue is down 17%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Cooper-Standard Holdings Inc. Been A Good Investment?

The return of -76% over three years would not have pleased Cooper-Standard Holdings Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Cooper-Standard Holdings (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Important note: Cooper-Standard Holdings 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.

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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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