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Shareholders of Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 06 May 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
How Does Total Compensation For Lance Sellers Compare With Other Companies In The Industry?
Our data indicates that Peoples Bancorp of North Carolina, Inc. has a market capitalization of US$136m, and total annual CEO compensation was reported as US$514k for the year to December 2020. That's slightly lower by 7.0% over the previous year. In particular, the salary of US$347.0k, 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$579k. This suggests that Peoples Bancorp of North Carolina remunerates its CEO largely in line with the industry average. Moreover, Lance Sellers also holds US$620k worth of Peoples Bancorp of North Carolina stock directly under their own name.
On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. According to our research, Peoples Bancorp of North Carolina has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Peoples Bancorp of North Carolina, Inc.'s Growth
Peoples Bancorp of North Carolina, Inc.'s earnings per share (EPS) grew 6.2% per year over the last three years. In the last year, its revenue is up 7.0%.
We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. 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 Peoples Bancorp of North Carolina, Inc. Been A Good Investment?
Given the total shareholder loss of 18% over three years, many shareholders in Peoples Bancorp of North Carolina, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
Important note: Peoples Bancorp of North Carolina 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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