In the past three years, shareholders of Norwood Financial Corp. (NASDAQ:NWFL) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 27 April 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
Comparing Norwood Financial Corp.'s CEO Compensation With the industry
At the time of writing, our data shows that Norwood Financial Corp. has a market capitalization of US$202m, and reported total annual CEO compensation of US$712k for the year to December 2020. We note that's an increase of 11% above last year. Notably, the salary which is US$390.0k, represents a considerable chunk of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$772k. So it looks like Norwood Financial compensates Lew Critelli in line with the median for the industry. Moreover, Lew Critelli also holds US$1.6m worth of Norwood Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. Norwood Financial is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Norwood Financial Corp.'s Growth
Norwood Financial Corp. has seen its earnings per share (EPS) increase by 17% a year over the past three years. It achieved revenue growth of 20% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Norwood Financial Corp. Been A Good Investment?
Since shareholders would have lost about 6.3% over three years, some Norwood Financial Corp. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Norwood Financial 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.
If you’re looking to trade Norwood Financial, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.