This article will reflect on the compensation paid to Anders Tomson who has served as CEO of Chemung Financial Corporation (NASDAQ:CHMG) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Chemung Financial Corporation's CEO Compensation With the industry
Our data indicates that Chemung Financial Corporation has a market capitalization of US$175m, and total annual CEO compensation was reported as US$855k for the year to December 2019. That's a modest increase of 6.6% on the prior year. In particular, the salary of US$460.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$877k. This suggests that Chemung Financial remunerates its CEO largely in line with the industry average. What's more, Anders Tomson holds US$1.3m worth of shares in the company in their own name.
On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. Chemung Financial is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Chemung Financial Corporation's Growth
Over the past three years, Chemung Financial Corporation has seen its earnings per share (EPS) grow by 13% per year. In the last year, its revenue is up 3.3%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Chemung Financial Corporation Been A Good Investment?
Since shareholders would have lost about 14% over three years, some Chemung Financial Corporation investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Chemung Financial Corporation 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. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Anders is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Chemung Financial (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Chemung Financial, 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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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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