It's Probably Less Likely That The Community Financial Corporation's (NASDAQ:TCFC) CEO Will See A Huge Pay Rise This Year

By
Simply Wall St
Published
May 19, 2021
NasdaqCM:TCFC
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As many shareholders of The Community Financial Corporation (NASDAQ:TCFC) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 26 May 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Community Financial

Comparing The Community Financial Corporation's CEO Compensation With the industry

At the time of writing, our data shows that The Community Financial Corporation has a market capitalization of US$205m, and reported total annual CEO compensation of US$999k for the year to December 2020. This means that the compensation hasn't changed much from last year. We note that the salary of US$535.0k makes up a sizeable portion of the total compensation received by the CEO.

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$772k. From this we gather that Bill Pasenelli is paid around the median for CEOs in the industry. Moreover, Bill Pasenelli also holds US$1.8m worth of Community Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$535k US$465k 54%
Other US$464k US$541k 46%
Total CompensationUS$999k US$1.0m100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that Community Financial pays out a greater portion of remuneration through salary, compared to the 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.

ceo-compensation
NasdaqCM:TCFC CEO Compensation May 20th 2021

A Look at The Community Financial Corporation's Growth Numbers

The Community Financial Corporation's earnings per share (EPS) grew 39% per year over the last three years. It achieved revenue growth of 16% 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. 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 The Community Financial Corporation Been A Good Investment?

With a three year total loss of 0.4% for the shareholders, The Community Financial Corporation would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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 can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Community Financial that investors should think about before committing capital to this stock.

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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