Dan Reininga became the CEO of Lake Shore Bancorp, Inc. (NASDAQ:LSBK) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Lake Shore Bancorp.
Comparing Lake Shore Bancorp, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Lake Shore Bancorp, Inc. has a market capitalization of US$78m, and reported total annual CEO compensation of US$514k for the year to December 2019. Notably, that's an increase of 9.4% over the year before. In particular, the salary of US$363.4k, 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$524k. This suggests that Lake Shore Bancorp remunerates its CEO largely in line with the industry average. Furthermore, Dan Reininga directly owns US$931k worth of shares in the company.
On an industry level, around 58% of total compensation represents salary and 42% is other remuneration. According to our research, Lake Shore 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.
Lake Shore Bancorp, Inc.'s Growth
Lake Shore Bancorp, Inc.'s earnings per share (EPS) grew 18% per year over the last three years. It achieved revenue growth of 3.7% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Lake Shore Bancorp, Inc. Been A Good Investment?
Given the total shareholder loss of 8.0% over three years, many shareholders in Lake Shore Bancorp, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Dan is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Lake Shore Bancorp that you should be aware of before investing.
Important note: Lake Shore Bancorp 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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