In the past three years, the share price of FNCB Bancorp, Inc. (NASDAQ:FNCB) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 12 May 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing FNCB Bancorp, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that FNCB Bancorp, Inc. has a market capitalization of US$141m, and reported total annual CEO compensation of US$698k for the year to December 2020. That's a modest increase of 6.3% on the prior year. Notably, the salary which is US$350.9k, represents a considerable chunk of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$577k. From this we gather that Jerry Champi is paid around the median for CEOs in the industry. What's more, Jerry Champi holds US$376k worth of shares in the company in their own name.
Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. According to our research, FNCB Bancorp has allocated a higher percentage of pay to salary in comparison to the wider 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.
FNCB Bancorp, Inc.'s Growth
FNCB Bancorp, Inc. has seen its earnings per share (EPS) increase by 42% a year over the past three years. It achieved revenue growth of 21% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 FNCB Bancorp, Inc. Been A Good Investment?
Since shareholders would have lost about 18% over three years, some FNCB Bancorp, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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 pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for FNCB Bancorp (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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