How Should Investors Feel About Orrstown Financial Services, Inc.’s (NASDAQ:ORRF) CEO Pay?

In 2009 Tom Quinn was appointed CEO of Orrstown Financial Services, Inc. (NASDAQ:ORRF). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Orrstown Financial Services

How Does Tom Quinn’s Compensation Compare With Similar Sized Companies?

According to our data, Orrstown Financial Services, Inc. has a market capitalization of US$243m, and pays its CEO total annual compensation worth US$1.5m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$515k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.2m.

Thus we can conclude that Tom Quinn receives more in total compensation than the median of a group of companies in the same market, and of similar size to Orrstown Financial Services, Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Orrstown Financial Services, below.

NasdaqCM:ORRF CEO Compensation, August 19th 2019
NasdaqCM:ORRF CEO Compensation, August 19th 2019

Is Orrstown Financial Services, Inc. Growing?

Over the last three years Orrstown Financial Services, Inc. has grown its earnings per share (EPS) by an average of 20% per year (using a line of best fit). In the last year, its revenue is up 24%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.

Has Orrstown Financial Services, Inc. Been A Good Investment?

Orrstown Financial Services, Inc. has generated a total shareholder return of 16% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We examined the amount Orrstown Financial Services, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Orrstown Financial Services.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.