How Should Investors React To Select Bancorp's (NASDAQ:SLCT) CEO Pay?

Simply Wall St
November 03, 2020

This article will reflect on the compensation paid to Bill Hedgepeth who has served as CEO of Select Bancorp, Inc. (NASDAQ:SLCT) since 2007. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Select Bancorp

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

At the time of writing, our data shows that Select Bancorp, Inc. has a market capitalization of US$139m, and reported total annual CEO compensation of US$622k for the year to December 2019. We note that's an increase of 34% above last year. We note that the salary portion, which stands at US$391.4k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$631k. So it looks like Select Bancorp compensates Bill Hedgepeth in line with the median for the industry. What's more, Bill Hedgepeth holds US$428k worth of shares in the company in their own name.

Component20192018Proportion (2019)
Salary US$391k US$371k 63%
Other US$230k US$92k 37%
Total CompensationUS$622k US$462k100%

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Select Bancorp is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

NasdaqGM:SLCT CEO Compensation November 3rd 2020

Select Bancorp, Inc.'s Growth

Select Bancorp, Inc. has reduced its earnings per share by 9.1% a year over the last three years. Its revenue is down 8.8% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Select Bancorp, Inc. Been A Good Investment?

Given the total shareholder loss of 33% over three years, many shareholders in Select Bancorp, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Select Bancorp pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Select Bancorp that investors should look into moving forward.

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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