In 2014 Bill Foster was appointed CEO of Village Bank and Trust Financial Corp. (NASDAQ:VBFC). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Bill Foster’s Compensation Compare With Similar Sized Companies?
Our data indicates that Village Bank and Trust Financial Corp. is worth US$54m, and total annual CEO compensation was reported as US$498k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$294k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$515k.
So Bill Foster is paid around the average of the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Village Bank and Trust Financial has changed from year to year.
Is Village Bank and Trust Financial Corp. Growing?
Village Bank and Trust Financial Corp. has reduced its earnings per share by an average of 62% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 12%.
Sadly for shareholders, earnings per share are actually down, over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Although we don’t have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Village Bank and Trust Financial Corp. Been A Good Investment?
I think that the total shareholder return of 34%, over three years, would leave most Village Bank and Trust Financial Corp. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Bill Foster is paid around the same as most CEOs of similar size companies.
We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we can’t see a reason to suggest the pay is inappropriate. So you may want to check if insiders are buying Village Bank and Trust Financial shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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