John Fitzgerald has been the CEO of Magyar Bancorp, Inc. (NASDAQ:MGYR) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Magyar Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Magyar Bancorp, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Magyar Bancorp, Inc. has a market capitalization of US$54m, and reported total annual CEO compensation of US$712k for the year to September 2019. That's a notable increase of 15% on last year. In particular, the salary of US$430.8k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$505k. Hence, we can conclude that John Fitzgerald is remunerated higher than the industry median. What's more, John Fitzgerald holds US$537k worth of shares in the company in their own name.
Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. Magyar Bancorp is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Magyar Bancorp, Inc.'s Growth
Magyar Bancorp, Inc. has seen its earnings per share (EPS) increase by 20% a year over the past three years. It saw its revenue drop 1.5% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Magyar Bancorp, Inc. Been A Good Investment?
With a three year total loss of 28% for the shareholders, Magyar Bancorp, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, Magyar Bancorp, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say John is underpaid, in fact compensation is definitely on the higher side.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Magyar Bancorp that investors should think about before committing capital to this stock.
Important note: Magyar Bancorp 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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