We Think Some Shareholders May Hesitate To Increase OceanFirst Financial Corp.'s (NASDAQ:OCFC) CEO Compensation

In the past three years, shareholders of OceanFirst Financial Corp. (NASDAQ:OCFC) 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. 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 OceanFirst Financial

Comparing OceanFirst Financial Corp.'s CEO Compensation With the industry

At the time of writing, our data shows that OceanFirst Financial Corp. has a market capitalization of US$1.3b, and reported total annual CEO compensation of US$3.0m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$946k.

On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$2.4m. So it looks like OceanFirst Financial compensates Chris Maher in line with the median for the industry. What's more, Chris Maher holds US$4.9m 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$946k	US$946k	32%
Other	US$2.0m	US$2.0m	68%
Total Compensation	US$3.0m	US$2.9m	100%

Talking in terms of the industry, salary represented approximately 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. OceanFirst Financial pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at OceanFirst Financial Corp.'s Growth Numbers

OceanFirst Financial Corp.'s earnings per share (EPS) grew 7.6% per year over the last three years. It achieved revenue growth of 11% over the last year.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 OceanFirst Financial Corp. Been A Good Investment?

Since shareholders would have lost about 14% over three years, some OceanFirst Financial Corp. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for OceanFirst Financial that investors should think about before committing capital to this stock.

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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