How Should Investors React To Mackinac Financial's (NASDAQ:MFNC) CEO Pay?

Paul Tobias has been the CEO of Mackinac Financial Corporation (NASDAQ:MFNC) since 2004, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Mackinac Financial.

Check out our latest analysis for Mackinac Financial

Comparing Mackinac Financial Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Mackinac Financial Corporation has a market capitalization of US$104m, and reported total annual CEO compensation of US$759k for the year to December 2019. We note that's an increase of 32% above last year. We note that the salary portion, which stands at US$384.8k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$639k. So it looks like Mackinac Financial compensates Paul Tobias in line with the median for the industry. Moreover, Paul Tobias also holds US$1.7m worth of Mackinac Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Mackinac Financial pays out 51% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Mackinac Financial Corporation's Growth

Mackinac Financial Corporation has seen its earnings per share (EPS) increase by 4.8% a year over the past three years. It achieved revenue growth of 6.3% over the last year.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Mackinac Financial Corporation Been A Good Investment?

With a three year total loss of 25% for the shareholders, Mackinac Financial Corporation would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Mackinac Financial Corporation is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But with negative shareholder returns and unimpressive EPS growth, shareholders will surely be disturbed. Although we wouldn't say CEO compensation is exceptionally high, it isn't very low either. Shareholders might want to see substantial improvements in returns before agreeing that Paul deserves a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Mackinac Financial (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Mackinac Financial, 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.

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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