Shareholders May Be Wary Of Increasing Oppenheimer Holdings Inc.'s (NYSE:OPY) CEO Compensation Package

Key Insights

• Oppenheimer Holdings' Annual General Meeting to take place on 6th of May
• Total pay for CEO Bud Lowenthal includes US$500.0k salary
• The overall pay is 286% above the industry average
• Oppenheimer Holdings' three-year loss to shareholders was 13% while its EPS was down 31% over the past three years

The results at Oppenheimer Holdings Inc. (NYSE:OPY) have been quite disappointing recently and CEO Bud Lowenthal bears some responsibility for this. At the upcoming AGM on 6th of May, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Oppenheimer Holdings

How Does Total Compensation For Bud Lowenthal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Oppenheimer Holdings Inc. has a market capitalization of US$427m, and reported total annual CEO compensation of US$4.8m for the year to December 2023. We note that's a decrease of 43% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$500k.

On comparing similar companies from the American Capital Markets industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$1.2m. Hence, we can conclude that Bud Lowenthal is remunerated higher than the industry median. Moreover, Bud Lowenthal also holds US$140m worth of Oppenheimer Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$500k	US$500k	10%
Other	US$4.3m	US$7.8m	90%
Total Compensation	US$4.8m	US$8.3m	100%

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. Although there is a difference in how total compensation is set, Oppenheimer 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.

A Look at Oppenheimer Holdings Inc.'s Growth Numbers

Oppenheimer Holdings Inc. has reduced its earnings per share by 31% a year over the last three years. Its revenue is up 6.4% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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?

Since shareholders would have lost about 13% over three years, some Oppenheimer Holdings Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to 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 did our research and spotted 2 warning signs for Oppenheimer Holdings that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.