Stock Analysis

Increases to VersaBank's (TSE:VB) CEO Compensation Might Cool off for now

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CEO David Taylor has done a decent job of delivering relatively good performance at VersaBank (TSE:VB) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 21 April 2021. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for VersaBank

Comparing VersaBank's CEO Compensation With the industry

At the time of writing, our data shows that VersaBank has a market capitalization of CA$366m, and reported total annual CEO compensation of CA$2.1m for the year to October 2020. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$632k.

In comparison with other companies in the industry with market capitalizations ranging from CA$126m to CA$502m, the reported median CEO total compensation was CA$969k. Accordingly, our analysis reveals that VersaBank pays David Taylor north of the industry median. Furthermore, David Taylor directly owns CA$16m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary CA$632k CA$612k 30%
Other CA$1.5m CA$1.3m 70%
Total CompensationCA$2.1m CA$1.9m100%

Speaking on an industry level, nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. According to our research, VersaBank has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

TSX:VB CEO Compensation April 16th 2021

VersaBank's Growth

VersaBank's earnings per share (EPS) grew 23% per year over the last three years. In the last year, its revenue is up 3.4%.

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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has VersaBank Been A Good Investment?

We think that the total shareholder return of 127%, over three years, would leave most VersaBank shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

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 2 warning signs for VersaBank (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from VersaBank, 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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