Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Chip Mahan is the CEO of Live Oak Bancshares, Inc. (NASDAQ:LOB). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Chip Mahan’s Compensation Compare With Similar Sized Companies?
Our data indicates that Live Oak Bancshares, Inc. is worth US$665m, and total annual CEO compensation is US$987k. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$511k. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$2.7m.
A first glance this seems like a real positive for shareholders, since Chip Mahan is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
You can see a visual representation of the CEO compensation at Live Oak Bancshares, below.
Is Live Oak Bancshares, Inc. Growing?
Over the last three years Live Oak Bancshares, Inc. has grown its earnings per share (EPS) by an average of 51% per year (using a line of best fit). In the last year, its revenue is up 2.3%.
This demonstrates that the company has been improving recently. A good result. It’s also good to see modest revenue growth, suggesting the underlying business is healthy.
Has Live Oak Bancshares, Inc. Been A Good Investment?
Live Oak Bancshares, Inc. has served shareholders reasonably well, with a total return of 20% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
It appears that Live Oak Bancshares, Inc. remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Chip Mahan is overcompensated.
Few would complain about reasonable CEO remuneration when the business is growing earnings per share. It would be an additional positive if insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling Live Oak Bancshares shares (free trial).
If you want to buy a stock that is better than Live Oak Bancshares, this free list of high return, low debt companies is a great place to look.
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 firstname.lastname@example.org. 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.