In 2007, Richard Gavegnano was appointed CEO of Meridian Bancorp, Inc. (NASDAQ:EBSB). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Richard Gavegnano’s Compensation Compare With Similar Sized Companies?
Our data indicates that Meridian Bancorp, Inc. is worth US$543m, and total annual CEO compensation was reported as US$1.6m for the year to December 2019. That’s less than last year. While we always look at total compensation first, we note that the salary component is less, at US$905k. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO total compensation was US$2.3m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. Our data reveals that Meridian Bancorp allocates salary in line with the wider market.
At first glance this seems like a real positive for shareholders, since Richard Gavegnano is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business. You can see a visual representation of the CEO compensation at Meridian Bancorp, below.
Is Meridian Bancorp, Inc. Growing?
On average over the last three years, Meridian Bancorp, Inc. has seen earnings per share (EPS) move in a favourable direction by 19% each year (using a line of best fit). It achieved revenue growth of 9.1% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.
Has Meridian Bancorp, Inc. Been A Good Investment?
Since shareholders would have lost about 33% over three years, some Meridian Bancorp, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
Meridian Bancorp, Inc. is currently paying its CEO below what is normal for companies of its size.
Since the business is growing, many would argue this suggests the pay is modest. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we would not say that Richard Gavegnano is generously paid, it would be good to see an improvement in business performance before too an increase in pay. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. Shifting gears from CEO pay for a second, we’ve spotted 3 warning signs for Meridian Bancorp you should be aware of, and 1 of them shouldn’t be ignored.
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.
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.
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. Thank you for reading.