What Did Cognition Holdings' (JSE:CGN) CEO Take Home Last Year?

The CEO of Cognition Holdings Limited (JSE:CGN) is Mark Smith, and this article examines 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 Cognition Holdings

Comparing Cognition Holdings Limited's CEO Compensation With the industry

According to our data, Cognition Holdings Limited has a market capitalization of R167m, and paid its CEO total annual compensation worth R3.7m over the year to June 2020. Notably, that's a decrease of 27% over the year before. Notably, the salary which is R3.38m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under R3.0b, the reported median total CEO compensation was R4.0m. From this we gather that Mark Smith is paid around the median for CEOs in the industry. Moreover, Mark Smith also holds R8.3m worth of Cognition Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 47% of total compensation out of all the companies we analyzed, while other remuneration made up 53% of the pie. It's interesting to note that Cognition Holdings pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Cognition Holdings Limited's Growth

Cognition Holdings Limited has reduced its earnings per share by 56% a year over the last three years. It achieved revenue growth of 22% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Cognition Holdings Limited Been A Good Investment?

Since shareholders would have lost about 29% over three years, some Cognition Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Mark is compensated close to the median for companies of its size, and which belong to the same industry. However, revenues have increased over the past year, a positive sign for the company. In contrast, over the same time span, shareholder returns are negative. EPS growth is also negative, adding insult to injury. We'd say CEO compensation isn't unfair, but shareholders may be wary of a bump in pay before the company substantially improves overall performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Cognition Holdings you should be aware of, and 1 of them can't be ignored.

Switching gears from Cognition Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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