Increases to CEO Compensation Might Be Put On Hold For Now at Piper Sandler Companies (NYSE:PIPR)

Performance at Piper Sandler Companies (NYSE:PIPR) has been reasonably good and CEO Chad Abraham has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 21 May 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Piper Sandler Companies

Comparing Piper Sandler Companies' CEO Compensation With the industry

According to our data, Piper Sandler Companies has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$6.7m over the year to December 2020. Notably, that's an increase of 44% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$283k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$4.1m. This suggests that Chad Abraham is paid more than the median for the industry. What's more, Chad Abraham holds US$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$283k	US$550k	4%
Other	US$6.4m	US$4.1m	96%
Total Compensation	US$6.7m	US$4.6m	100%

On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Piper Sandler Companies paid Chad Abraham a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Piper Sandler Companies' Growth

Piper Sandler Companies has seen its earnings per share (EPS) increase by 70% a year over the past three years. In the last year, its revenue is up 61%.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Piper Sandler Companies Been A Good Investment?

We think that the total shareholder return of 77%, over three years, would leave most Piper Sandler Companies shareholders smiling. 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...

Piper Sandler Companies primarily uses non-salary benefits to reward its CEO. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Piper Sandler Companies that investors should be aware of in a dynamic business environment.

Important note: Piper Sandler Companies 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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