Why We Think American National Bankshares Inc.'s (NASDAQ:AMNB) CEO Compensation Is Not Excessive At All

The performance at American National Bankshares Inc. (NASDAQ:AMNB) has been rather lacklustre of late and shareholders may be wondering what CEO Jeff Haley is planning to do about this. At the next AGM coming up on 18 May 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for American National Bankshares

Comparing American National Bankshares Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that American National Bankshares Inc. has a market capitalization of US$382m, and reported total annual CEO compensation of US$747k for the year to December 2020. That's a notable decrease of 21% on last year. We note that the salary portion, which stands at US$549.3k constitutes the majority of total compensation received by the CEO.

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$1.1m. This suggests that Jeff Haley is paid below the industry median. Moreover, Jeff Haley also holds US$2.1m worth of American National Bankshares stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$549k	US$534k	74%
Other	US$198k	US$408k	26%
Total Compensation	US$747k	US$942k	100%

Talking in terms of the industry, salary represented approximately 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. It's interesting to note that American National Bankshares pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

American National Bankshares Inc.'s Growth

Over the past three years, American National Bankshares Inc. has seen its earnings per share (EPS) grow by 15% per year. Revenue was pretty flat on last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has American National Bankshares Inc. Been A Good Investment?

Since shareholders would have lost about 0.7% over three years, some American National Bankshares Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The lacklustre share price returns is rather divergent to the robust growth in EPS, suggesting that there may be other factors weighing on it apart from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board and assess if the board's plan is likely to improve company performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for American National Bankshares that you should be aware of before investing.

Important note: American National Bankshares is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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