We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Cooper-Standard Holdings Inc.'s (NYSE:CPS) CEO For Now

Key Insights

• Cooper-Standard Holdings to hold its Annual General Meeting on 16th of May
• CEO Jeff Edwards' total compensation includes salary of US$1.02m
• Total compensation is 395% above industry average
• Over the past three years, Cooper-Standard Holdings' EPS grew by 5.7% and over the past three years, the total loss to shareholders 52%

Shareholders of Cooper-Standard Holdings Inc. (NYSE:CPS) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 16th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Cooper-Standard Holdings

Comparing Cooper-Standard Holdings Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Cooper-Standard Holdings Inc. has a market capitalization of US$247m, and reported total annual CEO compensation of US$7.6m for the year to December 2023. That's a notable increase of 62% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On examining similar-sized companies in the American Auto Components industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$1.5m. Hence, we can conclude that Jeff Edwards is remunerated higher than the industry median. What's more, Jeff Edwards holds US$3.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	13%
Other	US$6.6m	US$3.7m	87%
Total Compensation	US$7.6m	US$4.7m	100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. Cooper-Standard Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Cooper-Standard Holdings Inc.'s Growth Numbers

Cooper-Standard Holdings Inc.'s earnings per share (EPS) grew 5.7% per year over the last three years. Its revenue is up 8.3% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

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

The return of -52% over three years would not have pleased Cooper-Standard Holdings Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.