Here's Why Independent Bank Corporation's (NASDAQ:IBCP) CEO Compensation Is The Least Of Shareholders' Concerns

Performance at Independent Bank Corporation (NASDAQ:IBCP) has been reasonably good and CEO Brad Kessel has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 20 April 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for Independent Bank

How Does Total Compensation For Brad Kessel Compare With Other Companies In The Industry?

Our data indicates that Independent Bank Corporation has a market capitalization of US$526m, and total annual CEO compensation was reported as US$1.3m for the year to December 2020. That's a notable increase of 17% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$510k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.0m. This suggests that Independent Bank remunerates its CEO largely in line with the industry average. Furthermore, Brad Kessel directly owns US$3.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$510k	US$495k	39%
Other	US$783k	US$606k	61%
Total Compensation	US$1.3m	US$1.1m	100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. Our data reveals that Independent Bank allocates salary more or less in line with the wider market. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Independent Bank Corporation's Growth Numbers

Independent Bank Corporation's earnings per share (EPS) grew 39% per year over the last three years. It achieved revenue growth of 13% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Independent Bank Corporation Been A Good Investment?

Independent Bank Corporation has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same 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. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Independent Bank (1 is a bit concerning!) that you should be aware of before investing here.

Important note: Independent 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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