Stock Analysis

Shareholders May Not Be So Generous With Chemung Financial Corporation's (NASDAQ:CHMG) CEO Compensation And Here's Why

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In the past three years, the share price of Chemung Financial Corporation (NASDAQ:CHMG) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 08 June 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Chemung Financial

Comparing Chemung Financial Corporation's CEO Compensation With the industry

According to our data, Chemung Financial Corporation has a market capitalization of US$215m, and paid its CEO total annual compensation worth US$950k over the year to December 2020. That's a fairly small increase of 7.2% over the previous year. In particular, the salary of US$480.0k, makes up a fairly large 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$763k. So it looks like Chemung Financial compensates Anders Tomson in line with the median for the industry. What's more, Anders Tomson holds US$1.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$480k US$460k 51%
Other US$470k US$426k 49%
Total CompensationUS$950k US$886k100%

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 is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

NasdaqGS:CHMG CEO Compensation June 2nd 2021

A Look at Chemung Financial Corporation's Growth Numbers

Chemung Financial Corporation's earnings per share (EPS) grew 38% per year over the last three years. In the last year, its revenue is up 17%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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?

With a three year total loss of 5.3% for the shareholders, Chemung Financial Corporation would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Chemung Financial we think you should know about.

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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