This article will reflect on the compensation paid to Tom Quinn who has served as CEO of Orrstown Financial Services, Inc. (NASDAQ:ORRF) since 2009. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Tom Quinn Compare With Other Companies In The Industry?
Our data indicates that Orrstown Financial Services, Inc. has a market capitalization of US$163m, and total annual CEO compensation was reported as US$1.4m for the year to December 2019. Notably, that's a decrease of 9.4% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued 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$892k. This suggests that Tom Quinn is paid more than the median for the industry. What's more, Tom Quinn holds US$869k worth of shares in the company in their own name.
Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. Orrstown Financial Services 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 Orrstown Financial Services, Inc.'s Growth Numbers
Orrstown Financial Services, Inc.'s earnings per share (EPS) grew 24% per year over the last three years. It achieved revenue growth of 23% 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. 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 Orrstown Financial Services, Inc. Been A Good Investment?
Given the total shareholder loss of 35% over three years, many shareholders in Orrstown Financial Services, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
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.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Orrstown Financial Services we think you should know about.
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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