We Think Elmira Savings Bank's (NASDAQ:ESBK) CEO Compensation Package Needs To Be Put Under A Microscope

By
Simply Wall St
Published
April 20, 2021
NasdaqCM:ESBK
Source: Shutterstock

The results at Elmira Savings Bank (NASDAQ:ESBK) have been quite disappointing recently and CEO Tom Carr bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 April 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Elmira Savings Bank

How Does Total Compensation For Tom Carr Compare With Other Companies In The Industry?

At the time of writing, our data shows that Elmira Savings Bank has a market capitalization of US$49m, and reported total annual CEO compensation of US$535k for the year to December 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of US$399.5k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$523k. This suggests that Elmira Savings Bank remunerates its CEO largely in line with the industry average. Furthermore, Tom Carr directly owns US$2.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$399k US$389k 75%
Other US$135k US$158k 25%
Total CompensationUS$535k US$547k100%

On an industry level, around 51% of total compensation represents salary and 49% is other remuneration. Elmira Savings Bank is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
NasdaqCM:ESBK CEO Compensation April 21st 2021

Elmira Savings Bank's Growth

Earnings per share at Elmira Savings Bank are much the same as they were three years ago, albeit slightly lower. In the last year, its revenue is up 9.4%.

The lack of EPS growth is certainly uninspiring. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Elmira Savings Bank Been A Good Investment?

Given the total shareholder loss of 19% over three years, many shareholders in Elmira Savings Bank are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Elmira Savings Bank that you should be aware of before investing.

Important note: Elmira Savings Bank 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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