How Is Koss' (NASDAQ:KOSS) CEO Paid Relative To Peers?

Michael Koss became the CEO of Koss Corporation (NASDAQ:KOSS) in 1991, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Koss

Comparing Koss Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Koss Corporation has a market capitalization of US$16m, and reported total annual CEO compensation of US$553k for the year to June 2020. That's a notable decrease of 9.2% on last year. Notably, the salary which is US$325.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$518k. From this we gather that Michael Koss is paid around the median for CEOs in the industry. What's more, Michael Koss holds US$98k worth of shares in the company in their own name.

Speaking on an industry level, nearly 27% of total compensation represents salary, while the remainder of 73% is other remuneration. Koss pays out 59% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Koss Corporation's Growth Numbers

Koss Corporation has seen its earnings per share (EPS) increase by 85% a year over the past three years. It saw its revenue drop 16% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Koss Corporation Been A Good Investment?

With a total shareholder return of 26% over three years, Koss Corporation shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As previously discussed, Michael is compensated close to the median for companies of its size, and which belong to the same industry. However, it's admirable that over the last three years, EPS growth for the company has been impressive, though the same can't be said for investor returns. Considering overall performance, we'd say the compensation is fair, although stockholders will want to see higher returns moving forward.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Koss (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Koss 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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