Shareholders May Be A Little Conservative With Mercantile Bank Corporation's (NASDAQ:MBWM) CEO Compensation For Now

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

Under the guidance of CEO Bob Kaminski, Mercantile Bank Corporation (NASDAQ:MBWM) has performed reasonably well recently. As shareholders go into the upcoming AGM on 27 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

View our latest analysis for Mercantile Bank

How Does Total Compensation For Bob Kaminski Compare With Other Companies In The Industry?

At the time of writing, our data shows that Mercantile Bank Corporation has a market capitalization of US$519m, and reported total annual CEO compensation of US$1.1m for the year to December 2020. That's a modest increase of 7.2% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$539k.

For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.1m. This suggests that Mercantile Bank remunerates its CEO largely in line with the industry average. Moreover, Bob Kaminski also holds US$2.7m worth of Mercantile Bank stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$539k US$499k 50%
Other US$548k US$515k 50%
Total CompensationUS$1.1m US$1.0m100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. Mercantile Bank pays out 50% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:MBWM CEO Compensation May 20th 2021

Mercantile Bank Corporation's Growth

Over the past three years, Mercantile Bank Corporation has seen its earnings per share (EPS) grow by 12% per year. In the last year, its revenue is up 7.0%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Mercantile Bank Corporation Been A Good Investment?

Mercantile Bank Corporation has not done too badly by shareholders, with a total return of 1.2%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus 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 did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Mercantile Bank we think you should know about.

Switching gears from Mercantile Bank, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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