Increases to CEO Compensation Might Be Put On Hold For Now at Cambridge Bancorp (NASDAQ:CATC)

Performance at Cambridge Bancorp (NASDAQ:CATC) has been reasonably good and CEO Denis Sheahan has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 17 May 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Cambridge Bancorp

Comparing Cambridge Bancorp's CEO Compensation With the industry

Our data indicates that Cambridge Bancorp has a market capitalization of US$604m, and total annual CEO compensation was reported as US$2.2m for the year to December 2020. That's a notable increase of 11% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$558k.

In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$1.5m. Accordingly, our analysis reveals that Cambridge Bancorp pays Denis Sheahan north of the industry median. Moreover, Denis Sheahan also holds US$3.2m worth of Cambridge Bancorp 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$558k	US$508k	25%
Other	US$1.7m	US$1.5m	75%
Total Compensation	US$2.2m	US$2.0m	100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that Cambridge Bancorp allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Cambridge Bancorp's Growth Numbers

Cambridge Bancorp's earnings per share (EPS) grew 13% per year over the last three years. In the last year, its revenue is up 32%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Cambridge Bancorp Been A Good Investment?

Cambridge Bancorp has generated a total shareholder return of 8.2% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Cambridge Bancorp that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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