How Should Investors React To Oak Valley Bancorp's (NASDAQ:OVLY) CEO Pay?

Chris Courtney became the CEO of Oak Valley Bancorp (NASDAQ:OVLY) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Oak Valley Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Oak Valley Bancorp

How Does Total Compensation For Chris Courtney Compare With Other Companies In The Industry?

Our data indicates that Oak Valley Bancorp has a market capitalization of US$146m, and total annual CEO compensation was reported as US$769k for the year to December 2019. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$359k.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$629k. So it looks like Oak Valley Bancorp compensates Chris Courtney in line with the median for the industry. Furthermore, Chris Courtney directly owns US$3.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Oak Valley Bancorp is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Oak Valley Bancorp's Growth

Oak Valley Bancorp's earnings per share (EPS) grew 7.4% per year over the last three years. In the last year, its revenue changed by just 0.6%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Oak Valley Bancorp Been A Good Investment?

With a total shareholder return of 2.2% over three years, Oak Valley Bancorp has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As previously discussed, Chris is compensated close to the median for companies of its size, and which belong to the same industry. But the company has failed to produce substantial growth in either EPS or total shareholder return. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Chris should get a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Oak Valley Bancorp that you should be aware of before investing.

Important note: Oak Valley Bancorp is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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