Here's Why Shareholders Should Examine The National Security Group, Inc.'s (NASDAQ:NSEC) CEO Compensation Package More Closely

The results at The National Security Group, Inc. (NASDAQ:NSEC) have been quite disappointing recently and CEO Bill Brunson bears some responsibility for this. At the upcoming AGM on 21 May 2021, shareholders can hear from the board including their plans for turning around performance. 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.

See our latest analysis for National Security Group

How Does Total Compensation For Bill Brunson Compare With Other Companies In The Industry?

Our data indicates that The National Security Group, Inc. has a market capitalization of US$28m, and total annual CEO compensation was reported as US$318k for the year to December 2020. That's a slight decrease of 3.6% on the prior year. In particular, the salary of US$256.6k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$361k. So it looks like National Security Group compensates Bill Brunson in line with the median for the industry. Moreover, Bill Brunson also holds US$886k worth of National Security Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$257k	US$257k	81%
Other	US$62k	US$74k	19%
Total Compensation	US$318k	US$330k	100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. National Security Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

The National Security Group, Inc.'s Growth

Over the last three years, The National Security Group, Inc. has shrunk its earnings per share by 72% per year. Its revenue is down 1.1% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has The National Security Group, Inc. Been A Good Investment?

Given the total shareholder loss of 25% over three years, many shareholders in The National Security Group, Inc. are probably rather dissatisfied, to say the least. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for National Security Group (1 is significant!) that you should be aware of before investing here.

Switching gears from National Security Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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