We Think Some Shareholders May Hesitate To Increase Shore Bancshares, Inc.'s (NASDAQ:SHBI) CEO Compensation

In the past three years, shareholders of Shore Bancshares, Inc. (NASDAQ:SHBI) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 12 May 2021. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Shore Bancshares

How Does Total Compensation For Scott Beatty Compare With Other Companies In The Industry?

At the time of writing, our data shows that Shore Bancshares, Inc. has a market capitalization of US$196m, and reported total annual CEO compensation of US$763k for the year to December 2020. That's just a smallish increase of 3.1% on last year. We note that the salary portion, which stands at US$525.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$763k. So it looks like Shore Bancshares compensates Scott Beatty in line with the median for the industry. Furthermore, Scott Beatty directly owns US$1.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$525k	US$495k	69%
Other	US$238k	US$245k	31%
Total Compensation	US$763k	US$740k	100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that Shore Bancshares pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Shore Bancshares, Inc.'s Growth Numbers

Shore Bancshares, Inc. has seen its earnings per share (EPS) increase by 20% a year over the past three years. It achieved revenue growth of 2.3% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Shore Bancshares, Inc. Been A Good Investment?

Given the total shareholder loss of 3.0% over three years, many shareholders in Shore Bancshares, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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 1 warning sign for Shore Bancshares that investors should think about before committing capital to this stock.

Important note: Shore Bancshares 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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