Michael Pugh became the CEO of Carver Bancorp, Inc. (NASDAQ:CARV) in 2015, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Carver Bancorp, Inc.'s CEO Compensation With the industry
According to our data, Carver Bancorp, Inc. has a market capitalization of US$18m, and paid its CEO total annual compensation worth US$385k over the year to March 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of US$378.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$526k. So it looks like Carver Bancorp compensates Michael Pugh in line with the median for the industry. Moreover, Michael Pugh also holds US$124k worth of Carver Bancorp stock directly under their own name.
On an industry level, roughly 58% of total compensation represents salary and 42% is other remuneration. Carver Bancorp pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.
Carver Bancorp, Inc.'s Growth
Over the last three years, Carver Bancorp, Inc. has shrunk its earnings per share by 37% per year. In the last year, its revenue is down 6.5%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Carver Bancorp, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Carver Bancorp, Inc. for providing a total return of 170% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Carver Bancorp pays its CEO a majority of compensation through a salary. As we touched on above, Carver Bancorp, 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. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. But on the bright side, shareholder returns have moved northward during the same period. We wouldn't say CEO compensation is too high, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.
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. We did our research and identified 3 warning signs (and 1 which can't be ignored) in Carver Bancorp we think you should know about.
Switching gears from Carver Bancorp, 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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