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Mark Mason became the CEO of HomeStreet, Inc. (NASDAQ:HMST) in 2010, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for HomeStreet.
Comparing HomeStreet, Inc.'s CEO Compensation With the industry
According to our data, HomeStreet, Inc. has a market capitalization of US$669m, and paid its CEO total annual compensation worth US$1.7m over the year to December 2019. That's a modest increase of 3.2% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$700k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$1.7m. So it looks like HomeStreet compensates Mark Mason in line with the median for the industry. What's more, Mark Mason holds US$4.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. It's interesting to note that HomeStreet allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
HomeStreet, Inc.'s Growth
HomeStreet, Inc.'s earnings per share (EPS) grew 4.3% per year over the last three years. In the last year, its revenue is up 20%.
We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has HomeStreet, Inc. Been A Good Investment?
HomeStreet, Inc. has not done too badly by shareholders, with a total return of 6.1%, over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we touched on above, HomeStreet, Inc. 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. However, EPS and total shareholder return are solid yet uninspiring. We'd say that Mark is remunerated reasonably, but shareholders might be looking for better returns before they agree Mark deserves a raise.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for HomeStreet that investors should look into moving forward.
Important note: HomeStreet 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.
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