Shareholders May Be A Bit More Conservative With MainStreet Bancshares, Inc.'s (NASDAQ:MNSB) CEO Compensation For Now

In the past three years, the share price of MainStreet Bancshares, Inc. (NASDAQ:MNSB) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 19 May 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for MainStreet Bancshares

Comparing MainStreet Bancshares, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that MainStreet Bancshares, Inc. has a market capitalization of US$152m, and reported total annual CEO compensation of US$819k for the year to December 2020. That's a fairly small increase of 3.5% over the previous year. Notably, the salary which is US$507.5k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$772k. So it looks like MainStreet Bancshares compensates Jeff Dick in line with the median for the industry. What's more, Jeff Dick holds US$3.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$508k	US$500k	62%
Other	US$311k	US$291k	38%
Total Compensation	US$819k	US$791k	100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. MainStreet Bancshares pays out 62% of remuneration in the form of a salary, significantly higher than the industry average. 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.

A Look at MainStreet Bancshares, Inc.'s Growth Numbers

Over the past three years, MainStreet Bancshares, Inc. has seen its earnings per share (EPS) grow by 33% per year. In the last year, its revenue is up 20%.

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. 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 MainStreet Bancshares, Inc. Been A Good Investment?

With a three year total loss of 10% for the shareholders, MainStreet Bancshares, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for MainStreet Bancshares that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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