Here's Why Shareholders May Want To Be Cautious With Increasing HomeStreet, Inc.'s (NASDAQ:HMST) CEO Pay Packet

By
Simply Wall St
Published
May 20, 2021
NasdaqGS:HMST
Source: Shutterstock

CEO Mark Mason has done a decent job of delivering relatively good performance at HomeStreet, Inc. (NASDAQ:HMST) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 27 May 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for HomeStreet

Comparing HomeStreet, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that HomeStreet, Inc. has a market capitalization of US$949m, and reported total annual CEO compensation of US$2.2m for the year to December 2020. That's a notable increase of 26% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$738k.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$1.5m. This suggests that Mark Mason is paid more than the median for the industry. Moreover, Mark Mason also holds US$7.1m worth of HomeStreet stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$738k US$700k 34%
Other US$1.4m US$1.0m 66%
Total CompensationUS$2.2m US$1.7m100%

Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. It's interesting to note that HomeStreet allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqGS:HMST CEO Compensation May 21st 2021

A Look at HomeStreet, Inc.'s Growth Numbers

HomeStreet, Inc. has seen its earnings per share (EPS) increase by 26% a year over the past three years. Its revenue is up 34% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has HomeStreet, Inc. Been A Good Investment?

Boasting a total shareholder return of 66% over three years, HomeStreet, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for HomeStreet (1 shouldn't be ignored!) that you should be aware of before investing here.

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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