We Think The Compensation For Meridian Bancorp, Inc.'s (NASDAQ:EBSB) CEO Looks About Right

By
Simply Wall St
Published
May 13, 2021
NasdaqGS:EBSB
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Performance at Meridian Bancorp, Inc. (NASDAQ:EBSB) has been reasonably good and CEO Richard Gavegnano 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 19 May 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

View our latest analysis for Meridian Bancorp

Comparing Meridian Bancorp, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Meridian Bancorp, Inc. has a market capitalization of US$1.1b, and reported total annual CEO compensation of US$2.3m for the year to December 2020. We note that's an increase of 49% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$975k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$1.8m. So it looks like Meridian Bancorp compensates Richard Gavegnano in line with the median for the industry. Furthermore, Richard Gavegnano directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$975k US$905k 42%
Other US$1.4m US$655k 58%
Total CompensationUS$2.3m US$1.6m100%

On an industry level, total compensation is equally proportioned between salary and other compensation, that is, they each represent approximately 50% of the total compensation. Meridian Bancorp sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:EBSB CEO Compensation May 14th 2021

A Look at Meridian Bancorp, Inc.'s Growth Numbers

Over the past three years, Meridian Bancorp, Inc. has seen its earnings per share (EPS) grow by 20% per year. It achieved revenue growth of 6.3% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Meridian Bancorp, Inc. Been A Good Investment?

Meridian Bancorp, Inc. has served shareholders reasonably well, with a total return of 15% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Meridian Bancorp (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from Meridian Bancorp, 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.