This article will reflect on the compensation paid to Andrew Cogan who has served as CEO of Knoll, Inc. (NYSE:KNL) since 2001. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Knoll, Inc.'s CEO Compensation With the industry
Our data indicates that Knoll, Inc. has a market capitalization of US$657m, and total annual CEO compensation was reported as US$5.4m for the year to December 2019. That's a notable increase of 21% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.
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$4.2m. From this we gather that Andrew Cogan is paid around the median for CEOs in the industry. What's more, Andrew Cogan holds US$6.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. In Knoll's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Knoll, Inc.'s Growth
Over the last three years, Knoll, Inc. has shrunk its earnings per share by 26% per year. It saw its revenue drop 2.9% over the last year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Knoll, Inc. Been A Good Investment?
With a three year total loss of 33% for the shareholders, Knoll, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Andrew is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Knoll (1 is a bit concerning!) that you should be aware of before investing here.
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.
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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