Walt Kaczmarek has been the CEO of Heritage Commerce Corp (NASDAQ:HTBK) since 2005. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Walt Kaczmarek’s Compensation Compare With Similar Sized Companies?
Our data indicates that Heritage Commerce Corp is worth US$562m, and total annual CEO compensation is US$1.0m. (This number is for the twelve months until December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$470k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.6m.
Most shareholders would consider it a positive that Walt Kaczmarek takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Heritage Commerce has changed from year to year.
Is Heritage Commerce Corp Growing?
On average over the last three years, Heritage Commerce Corp has grown earnings per share (EPS) by 7.3% each year (using a line of best fit). In the last year, its revenue is up 11%.
I would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while we’d stop just short of calling this a top performer, but we think it is well worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Heritage Commerce Corp Been A Good Investment?
I think that the total shareholder return of 40%, over three years, would leave most Heritage Commerce Corp shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that Heritage Commerce Corp remunerates its CEO below most similar sized companies.
Walt Kaczmarek is paid less than what is normal at similar size companies, and the total shareholder return has been pleasing over the last three years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. So you may want to check if insiders are buying Heritage Commerce shares with their own money (free access).
Important note: Heritage Commerce may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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