Kevin McPhaill became the CEO of Sierra Bancorp (NASDAQ:BSRR) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Sierra Bancorp.
How Does Total Compensation For Kevin McPhaill Compare With Other Companies In The Industry?
At the time of writing, our data shows that Sierra Bancorp has a market capitalization of US$366m, and reported total annual CEO compensation of US$1.1m for the year to December 2019. That's a notable increase of 12% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$525k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.1m. This suggests that Sierra Bancorp remunerates its CEO largely in line with the industry average. Moreover, Kevin McPhaill also holds US$1.2m worth of Sierra Bancorp stock directly under their own name.
Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Sierra Bancorp is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Sierra Bancorp's Growth
Sierra Bancorp has seen its earnings per share (EPS) increase by 16% a year over the past three years. It achieved revenue growth of 3.3% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 Sierra Bancorp Been A Good Investment?
Since shareholders would have lost about 4.1% over three years, some Sierra Bancorp investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Sierra Bancorp is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. But EPS growth is moving in a favorable direction, certainly a positive sign. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Sierra Bancorp that investors should be aware of in a dynamic business environment.
Important note: Sierra Bancorp 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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