We Discuss Why Union Bankshares, Inc.'s (NASDAQ:UNB) CEO Compensation May Be Closely Reviewed

Key Insights

• Union Bankshares will host its Annual General Meeting on 15th of May
• CEO David Silverman's total compensation includes salary of US$460.0k
• The overall pay is comparable to the industry average
• Union Bankshares' three-year loss to shareholders was 10% while its EPS was down 7.7% over the past three years

The results at Union Bankshares, Inc. (NASDAQ:UNB) have been quite disappointing recently and CEO David Silverman bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15th of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Union Bankshares

How Does Total Compensation For David Silverman Compare With Other Companies In The Industry?

Our data indicates that Union Bankshares, Inc. has a market capitalization of US$115m, and total annual CEO compensation was reported as US$714k for the year to December 2023. That's a notable decrease of 9.5% on last year. We note that the salary portion, which stands at US$460.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the American Banks industry with market capitalizations under US$200m, the reported median total CEO compensation was US$643k. From this we gather that David Silverman is paid around the median for CEOs in the industry. Moreover, David Silverman also holds US$732k worth of Union Bankshares stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	US$460k	US$437k	64%
Other	US$254k	US$352k	36%
Total Compensation	US$714k	US$789k	100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. According to our research, Union Bankshares has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Union Bankshares, Inc.'s Growth

Over the last three years, Union Bankshares, Inc. has shrunk its earnings per share by 7.7% per year. Its revenue is down 3.2% 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Union Bankshares, Inc. Been A Good Investment?

Since shareholders would have lost about 10% over three years, some Union Bankshares, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Union Bankshares (free visualization of insider trades).

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.