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In 2007, Richard Gavegnano was appointed CEO of Meridian Bancorp, Inc. (NASDAQ:EBSB). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Richard Gavegnano's Compensation Compare With Similar Sized Companies?
Our data indicates that Meridian Bancorp, Inc. is worth US$500m, and total annual CEO compensation was reported as US$1.6m for the year to December 2019. That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$905k. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$2.3m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. Our data reveals that Meridian Bancorp allocates salary in line with the wider market.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. You can see, below, how CEO compensation at Meridian Bancorp has changed over time.
Is Meridian Bancorp, Inc. Growing?
Over the last three years Meridian Bancorp, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 19% per year (using a line of best fit). It achieved revenue growth of 9.1% over the last year.
This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Meridian Bancorp, Inc. Been A Good Investment?
Since shareholders would have lost about 37% over three years, some Meridian Bancorp, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
It looks like Meridian Bancorp, Inc. pays its CEO less than similar sized companies.
Since the business is growing, many would argue this suggests the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. We're not critical of the remuneration Richard Gavegnano receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. On another note, Meridian Bancorp has 3 warning signs (and 1 which is a bit concerning) we think you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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. Thank you for reading.