We Think Shareholders May Want To Consider A Review Of Auburn National Bancorporation, Inc.'s (NASDAQ:AUBN) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at Auburn National Bancorporation, Inc. (NASDAQ:AUBN) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 11 May 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Auburn National Bancorporation

How Does Total Compensation For Bob Dumas Compare With Other Companies In The Industry?

Our data indicates that Auburn National Bancorporation, Inc. has a market capitalization of US$126m, and total annual CEO compensation was reported as US$420k for the year to December 2020. We note that's a decrease of 12% compared to last year. We note that the salary portion, which stands at US$335.1k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$574k. From this we gather that Bob Dumas is paid around the median for CEOs in the industry. Moreover, Bob Dumas also holds US$1.4m worth of Auburn National Bancorporation 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$335k	US$329k	80%
Other	US$85k	US$149k	20%
Total Compensation	US$420k	US$477k	100%

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Auburn National Bancorporation pays out 80% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Auburn National Bancorporation, Inc.'s Growth Numbers

Over the last three years, Auburn National Bancorporation, Inc. has shrunk its earnings per share by 1.4% per year. In the last year, its revenue is down 1.3%.

A lack of EPS improvement is not good to see. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Auburn National Bancorporation, Inc. Been A Good Investment?

Given the total shareholder loss of 11% over three years, many shareholders in Auburn National Bancorporation, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Auburn National Bancorporation that investors should be aware of in a dynamic business environment.

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