We Take A Look At Whether Pzena Investment Management, Inc's (NYSE:PZN) CEO May Be Underpaid

The impressive results at Pzena Investment Management, Inc (NYSE:PZN) recently will be great news for shareholders. At the upcoming AGM on 19 May 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Pzena Investment Management

How Does Total Compensation For Rich Pzena Compare With Other Companies In The Industry?

At the time of writing, our data shows that Pzena Investment Management, Inc has a market capitalization of US$795m, and reported total annual CEO compensation of US$2.4m for the year to December 2020. We note that's a small decrease of 4.7% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$365k.

In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$3.5m. This suggests that Rich Pzena is paid below the industry median.

Component	2020	2019	Proportion (2020)
Salary	US$365k	US$365k	15%
Other	US$2.0m	US$2.1m	85%
Total Compensation	US$2.4m	US$2.5m	100%

On an industry level, around 12% of total compensation represents salary and 88% is other remuneration. Pzena Investment Management pays out 15% 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.

A Look at Pzena Investment Management, Inc's Growth Numbers

Pzena Investment Management, Inc has seen its earnings per share (EPS) increase by 18% a year over the past three years. Its revenue is up 1.2% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Pzena Investment Management, Inc Been A Good Investment?

Most shareholders would probably be pleased with Pzena Investment Management, Inc for providing a total return of 36% 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.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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 2 warning signs for Pzena Investment Management (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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