What Did 2U's (NASDAQ:TWOU) CEO Take Home Last Year?

Chip Paucek became the CEO of 2U, Inc. (NASDAQ:TWOU) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for 2U.

See our latest analysis for 2U

Comparing 2U, Inc.'s CEO Compensation With the industry

According to our data, 2U, Inc. has a market capitalization of US$2.8b, and paid its CEO total annual compensation worth US$6.6m over the year to December 2019. That's a notable decrease of 61% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$557k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$6.1m. From this we gather that Chip Paucek is paid around the median for CEOs in the industry. Moreover, Chip Paucek also holds US$9.1m worth of 2U stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. 2U sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at 2U, Inc.'s Growth Numbers

Over the last three years, 2U, Inc. has shrunk its earnings per share by 78% per year. It achieved revenue growth of 42% over the last year.

The reduction in earnings, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has 2U, Inc. Been A Good Investment?

Given the total shareholder loss of 14% over three years, many shareholders in 2U, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, 2U, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, revenues have increased over the past year, a positive sign for the company. Contrarily, shareholder returns are in the red over the same stretch. EPS growth is also negative, adding insult to injury. It's tough for us to say Chip is overpaid but a mixed bag in terms of performance will surely irk shareholders and reduce chances of a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for 2U that you should be aware of before investing.

Important note: 2U 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.

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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