Is Independent Bank Corporation (NASDAQ:IBCP) Overpaying Its CEO?

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Brad Kessel has been the CEO of Independent Bank Corporation (NASDAQ:IBCP) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Independent Bank

How Does Brad Kessel’s Compensation Compare With Similar Sized Companies?

Our data indicates that Independent Bank Corporation is worth US$513m, and total annual CEO compensation is US$1.1m. (This number is for the twelve months until December 2018). That’s a notable increase of 11% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$480k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.6m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Independent Bank has changed from year to year.

NasdaqGS:IBCP CEO Compensation, May 7th 2019
NasdaqGS:IBCP CEO Compensation, May 7th 2019

Is Independent Bank Corporation Growing?

Independent Bank Corporation has increased its earnings per share (EPS) by an average of 18% a year, over the last three years (using a line of best fit). Its revenue is up 20% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Independent Bank Corporation Been A Good Investment?

I think that the total shareholder return of 59%, over three years, would leave most Independent Bank Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

It looks like Independent Bank Corporation pays its CEO less than similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Brad Kessel deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. Shareholders may want to check for free if Independent Bank insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.