Does TowneBank's (NASDAQ:TOWN) CEO Salary Compare Well With The Performance Of The Company?

J. Davis has been the CEO of TowneBank (NASDAQ:TOWN) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether TowneBank pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for TowneBank

Comparing TowneBank's CEO Compensation With the industry

At the time of writing, our data shows that TowneBank has a market capitalization of US$1.7b, and reported total annual CEO compensation of US$2.3m for the year to December 2019. Notably, that's an increase of 11% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$825k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$2.4m. This suggests that TowneBank remunerates its CEO largely in line with the industry average. Moreover, J. Davis also holds US$3.4m worth of TowneBank stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. TowneBank sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at TowneBank's Growth Numbers

TowneBank's earnings per share (EPS) grew 6.0% per year over the last three years. It achieved revenue growth of 2.8% over the last year.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has TowneBank Been A Good Investment?

Given the total shareholder loss of 16% over three years, many shareholders in TowneBank are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, J. is compensated close to the median for companies of its size, and which belong to the same industry. This doesn't look good when you place it against the backdrop of negative shareholder returns and flat EPS growth. CEO pay isn't exceptionally high, but considering poor performance, shareholders will likely hold off support for a raise until results improve.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for TowneBank (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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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