We Think Shareholders Are Less Likely To Approve A Large Pay Rise For MetroCity Bankshares, Inc.'s (NASDAQ:MCBS) CEO For Now

MetroCity Bankshares, Inc. (NASDAQ:MCBS) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 20 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for MetroCity Bankshares

Comparing MetroCity Bankshares, Inc.'s CEO Compensation With the industry

Our data indicates that MetroCity Bankshares, Inc. has a market capitalization of US$419m, and total annual CEO compensation was reported as US$1.7m for the year to December 2020. Notably, that's an increase of 27% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$369k.

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$1.1m. This suggests that Nack Paek is paid more than the median for the industry. Moreover, Nack Paek also holds US$20m worth of MetroCity Bankshares stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$369k	US$369k	21%
Other	US$1.4m	US$988k	79%
Total Compensation	US$1.7m	US$1.4m	100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. MetroCity Bankshares pays a modest slice of remuneration through salary, as compared 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.

A Look at MetroCity Bankshares, Inc.'s Growth Numbers

Over the last three years, MetroCity Bankshares, Inc. has shrunk its earnings per share by 3.5% per year. In the last year, its revenue is down 7.8%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 MetroCity Bankshares, Inc. Been A Good Investment?

We think that the total shareholder return of 42%, over three years, would leave most MetroCity Bankshares, Inc. 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...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for MetroCity Bankshares that investors should look into moving forward.

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

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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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