What We Learned About Icahn Enterprises' (NASDAQ:IEP) CEO Pay

Keith Cozza became the CEO of Icahn Enterprises L.P. (NASDAQ:IEP) in 2014, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Icahn Enterprises

Comparing Icahn Enterprises L.P.'s CEO Compensation With the industry

At the time of writing, our data shows that Icahn Enterprises L.P. has a market capitalization of US$12b, and reported total annual CEO compensation of US$6.5m for the year to December 2019. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$19m. That is to say, Keith Cozza is paid under the industry median. Furthermore, Keith Cozza directly owns US$101k worth of shares in the company.

Talking in terms of the industry, salary represented approximately 10% of total compensation out of all the companies we analyzed, while other remuneration made up 90% of the pie. Icahn Enterprises pays out 23% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Icahn Enterprises L.P.'s Growth

Over the last three years, Icahn Enterprises L.P. has shrunk its earnings per share by 120% per year. Its revenue is down 33% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Icahn Enterprises L.P. Been A Good Investment?

Most shareholders would probably be pleased with Icahn Enterprises L.P. for providing a total return of 37% over three years. 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.

To Conclude...

As previously discussed, Keith is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. And while EPS growth is negative, shareholder returns have been healthy recently. So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Icahn Enterprises that investors should be aware of in a dynamic business environment.

Important note: Icahn Enterprises 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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