Brad Kessel has been the CEO of Independent Bank Corporation (NASDAQ:IBCP) since 2013, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Independent Bank.
Comparing Independent Bank Corporation’s CEO Compensation With the industry
Our data indicates that Independent Bank Corporation has a market capitalization of US$320m, and total annual CEO compensation was reported as US$1.1m for the year to December 2019. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$495k.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.2m. This suggests that Independent Bank remunerates its CEO largely in line with the industry average. What’s more, Brad Kessel holds US$1.8m 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 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Independent Bank is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
Independent Bank Corporation’s Growth
Over the past three years, Independent Bank Corporation has seen its earnings per share (EPS) grow by 22% per year. In the last year, its revenue is up 6.2%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Independent Bank Corporation Been A Good Investment?
Given the total shareholder loss of 21% over three years, many shareholders in Independent Bank Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Independent Bank Corporation 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. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But on the bright side, EPS growth is positive over the same period. Considering positive EPS growth, we’d say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.
CEO compensation is an important area to keep your eyes on, but we’ve also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Independent Bank you should be aware of, and 1 of them doesn’t sit too well with us.
Switching gears from Independent Bank, 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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