Does Orrstown Financial Services' (NASDAQ:ORRF) CEO Salary Compare Well With The Performance Of The Company?

Simply Wall St
November 20, 2020

Tom Quinn has been the CEO of Orrstown Financial Services, Inc. (NASDAQ:ORRF) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Orrstown Financial Services.

View our latest analysis for Orrstown Financial Services

How Does Total Compensation For Tom Quinn Compare With Other Companies In The Industry?

At the time of writing, our data shows that Orrstown Financial Services, Inc. has a market capitalization of US$178m, and reported total annual CEO compensation of US$1.4m for the year to December 2019. We note that's a decrease of 9.4% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$530k.

On examining similar-sized companies in the industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$840k. Accordingly, our analysis reveals that Orrstown Financial Services, Inc. pays Tom Quinn north of the industry median. Furthermore, Tom Quinn directly owns US$964k worth of shares in the company.

Component20192018Proportion (2019)
Salary US$530k US$515k 38%
Other US$862k US$1.0m 62%
Total CompensationUS$1.4m US$1.5m100%

On an industry level, around 43% of total compensation represents salary and 57% is other remuneration. Orrstown Financial Services sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NasdaqCM:ORRF CEO Compensation November 20th 2020

A Look at Orrstown Financial Services, Inc.'s Growth Numbers

Over the past three years, Orrstown Financial Services, Inc. has seen its earnings per share (EPS) grow by 15% per year. Its revenue is up 9.8% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Orrstown Financial Services, Inc. Been A Good Investment?

Since shareholders would have lost about 29% over three years, some Orrstown Financial Services, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Orrstown Financial Services, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed with its EPS growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we'd stop short of calling it inappropriate, we think Tom is earning a very handsome sum.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Orrstown Financial Services we think you should know about.

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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