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How Is ChoiceOne Financial Services' (NASDAQ:COFS) CEO Paid Relative To Peers?

Kelly Potes has been the CEO of ChoiceOne Financial Services, Inc. (NASDAQ:COFS) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether ChoiceOne Financial Services pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for ChoiceOne Financial Services

Comparing ChoiceOne Financial Services, Inc.'s CEO Compensation With the industry

Our data indicates that ChoiceOne Financial Services, Inc. has a market capitalization of US$236m, and total annual CEO compensation was reported as US$428k for the year to December 2019. Notably, that's an increase of 23% over the year before. Notably, the salary which is US$286.7k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$845k. That is to say, Kelly Potes is paid under the industry median. Moreover, Kelly Potes also holds US$909k worth of ChoiceOne Financial Services stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$287k

US$255k

67%

Other

US$142k

US$93k

33%

Total Compensation

US$428k

US$348k

100%

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. It's interesting to note that ChoiceOne Financial Services pays out a greater portion of remuneration through salary, compared to the 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.

ceo-compensation
ceo-compensation

A Look at ChoiceOne Financial Services, Inc.'s Growth Numbers

Over the past three years, ChoiceOne Financial Services, Inc. has seen its earnings per share (EPS) grow by 3.2% per year. In the last year, its revenue is up 120%.

It's great to see that revenue growth is strong. And in that context, the modest EPS improvement certainly isn't shabby. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has ChoiceOne Financial Services, Inc. Been A Good Investment?

Boasting a total shareholder return of 56% over three years, ChoiceOne Financial Services, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, ChoiceOne Financial Services pays its CEO lower than the norm for similar-sized companies belonging to the same industry. In contrast, shareholder returns have been excellent over the past three years, and that’s certainly a promising trend to keep an eye on. As a result of the juicy return to investors, CEO compensation may well be quite reasonable.

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. That's why we did our research, and identified 2 warning signs for ChoiceOne Financial Services (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: ChoiceOne Financial Services 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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