Stock Analysis

A Quick Analysis On Customers Bancorp's (NYSE:CUBI) CEO Compensation

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Jay Sidhu has been the CEO of Customers Bancorp, Inc. (NYSE:CUBI) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Customers Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Customers Bancorp

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

At the time of writing, our data shows that Customers Bancorp, Inc. has a market capitalization of US$543m, and reported total annual CEO compensation of US$3.1m for the year to December 2019. That's a notable increase of 67% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$736k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$1.2m. This suggests that Jay Sidhu is paid more than the median for the industry. Furthermore, Jay Sidhu directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$736k US$681k 24%
Other US$2.3m US$1.1m 76%
Total CompensationUS$3.1m US$1.8m100%

Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. Customers Bancorp sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NYSE:CUBI CEO Compensation December 2nd 2020

Customers Bancorp, Inc.'s Growth

Over the past three years, Customers Bancorp, Inc. has seen its earnings per share (EPS) grow by 11% per year. It achieved revenue growth of 23% 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Customers Bancorp, Inc. Been A Good Investment?

Given the total shareholder loss of 36% over three years, many shareholders in Customers Bancorp, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Customers Bancorp pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

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. We identified 3 warning signs for Customers Bancorp (1 is significant!) that you should be aware of before investing here.

Important note: Customers Bancorp is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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