Does Bancorp 34 Inc's (NASDAQ:BCTF) CEO Pay Matter?

Jill Gutierrez is the CEO of Bancorp 34 Inc (NASDAQ:BCTF), which has recently grown to a market capitalization of US$51.74M. Understanding how CEOs are incentivised to run and grow their company is an important aspect of investing in a stock. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. I will break down Gutierrez’s pay and compare this to the company’s performance over the same period, as well as measure it against other US CEOs leading companies of similar size and profitability. See our latest analysis for Bancorp 34

Did Gutierrez create value?

Earnings is a powerful indication of BCTF's ability to invest shareholders' funds and generate returns. Therefore I will use earnings as a proxy of Gutierrez's performance in the past year. Recently, BCTF produced a profit of US$919.93K , which is a rather significant decline from its prior year’s profit (excluding extraordinary items) of US$5.09M. However, BCTF has strived to maintain a good track record of profitability, given its average EPS of US$0.15 over the past couple of years. In the situation of abating earnings, the company may be incurring a period of reinvestment and growth, or it can be a sign of some headwind. In any case, CEO compensation should be reflective of the current state of the business. In the most recent financial statments, Gutierrez's total remuneration grew by 76.52% to US$675.70K. In addition to this, Gutierrez's pay is also made up of 0.065% non-cash elements, which means that variabilities in BCTF's share price can impact the actual level of what the CEO actually receives.

Is BCTF overpaying the CEO?

Even though one size does not fit all, since compensation should be tailored to the specific company and market, we can estimate a high-level yardstick to see if BCTF deviates substantially from its peers. This exercise can help shareholders ask the right question about Gutierrez’s incentive alignment. Normally, a US small-cap has a value of $1B, generates earnings of $96M, and remunerates its CEO at roughly $2.7M annually. Allowing for BCTF's size and performance, in terms of market cap and earnings, it appears that Gutierrez is compensated similar to the average US small-cap CEO This could mean Gutierrez is paid a suitable level.

Next Steps:

Hopefully this article has given you insight on how shareholders should think about BCTF's governance policies such as CEO pay. As an investor, you have the right to understand how the board thinks about management incentives, and also the right to vote for and against substantial CEO pay changes. Governance is a big factor in investing, and I encourage you to dig deeper into those that represent your voice on the board. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:

1. Governance: To find out more about BCTF's governance, look through our infographic report of the company's board and management.
2. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BCTF? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.