Here's Why Shareholders Should Examine California BanCorp's (NASDAQ:CALB) CEO Compensation Package More Closely
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The results at California BanCorp (NASDAQ:CALB) have been quite disappointing recently and CEO Steve Shelton 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 20 May 2021. 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 California BanCorp
Comparing California BanCorp's CEO Compensation With the industry
Our data indicates that California BanCorp has a market capitalization of US$145m, and total annual CEO compensation was reported as US$735k for the year to December 2020. That's a notable decrease of 33% on last year. We note that the salary of US$400.0k makes up a sizeable portion of the total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$572k. From this we gather that Steve Shelton is paid around the median for CEOs in the industry. What's more, Steve Shelton holds US$717k worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$400k | US$386k | 54% |
Other | US$335k | US$707k | 46% |
Total Compensation | US$735k | US$1.1m | 100% |
On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. According to our research, California BanCorp has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
California BanCorp's Growth
Over the last three years, California BanCorp has shrunk its earnings per share by 4.1% per year. Its revenue is up 7.1% over the last year.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has California BanCorp Been A Good Investment?
With a three year total loss of 20% for the shareholders, California BanCorp would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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.
Whatever your view on compensation, you might want to check if insiders are buying or selling California BanCorp shares (free trial).
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.
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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