How Should Investors Feel About Riverview Bancorp's (NASDAQ:RVSB) CEO Remuneration?

This article will reflect on the compensation paid to Kevin Lycklama who has served as CEO of Riverview Bancorp, Inc. (NASDAQ:RVSB) since 2018. This analysis will also assess whether Riverview Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Riverview Bancorp

Comparing Riverview Bancorp, Inc.'s CEO Compensation With the industry

Our data indicates that Riverview Bancorp, Inc. has a market capitalization of US$115m, and total annual CEO compensation was reported as US$719k for the year to March 2020. Notably, that's an increase of 15% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$348k.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$524k. This suggests that Kevin Lycklama is paid more than the median for the industry. What's more, Kevin Lycklama holds US$1.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. In Riverview Bancorp's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Riverview Bancorp, Inc.'s Growth Numbers

Over the past three years, Riverview Bancorp, Inc. has seen its earnings per share (EPS) grow by 1.1% per year. In the last year, its revenue is down 17%.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Riverview Bancorp, Inc. Been A Good Investment?

Since shareholders would have lost about 40% over three years, some Riverview Bancorp, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Riverview Bancorp pays its CEO higher than the norm for similar-sized companies belonging to the same industry. While we have not been overly impressed by the business performance, the shareholder returns have been utterly depressing, over the last three years. And the situation doesn't look all that good when you see Kevin is remunerated higher than the industry average. With such poor returns, we would understand if shareholders had concerns related to the CEO's pay.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Riverview Bancorp (1 is a bit concerning!) that you should be aware of before investing here.

Important note: Riverview 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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