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Increases to CEO Compensation Might Be Put On Hold For Now at Federal Agricultural Mortgage Corporation (NYSE:AGM)

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·3 min read
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CEO Brad Nordholm has done a decent job of delivering relatively good performance at Federal Agricultural Mortgage Corporation (NYSE:AGM) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 13 May 2021. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for Federal Agricultural Mortgage

Comparing Federal Agricultural Mortgage Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Federal Agricultural Mortgage Corporation has a market capitalization of US$1.2b, and reported total annual CEO compensation of US$2.7m for the year to December 2020. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$750k.

In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$1.8m. Hence, we can conclude that Brad Nordholm is remunerated higher than the industry median. Moreover, Brad Nordholm also holds US$1.3m worth of Federal Agricultural Mortgage stock directly under their own name.

Component

2020

2019

Proportion (2020)

Salary

US$750k

US$750k

28%

Other

US$1.9m

US$2.0m

72%

Total Compensation

US$2.7m

US$2.7m

100%

Speaking on an industry level, salary and non-salary portions, both make up 50% each of the total remuneration. It's interesting to note that Federal Agricultural Mortgage allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

Federal Agricultural Mortgage Corporation's Growth

Federal Agricultural Mortgage Corporation's earnings per share (EPS) grew 7.3% per year over the last three years. Its revenue is up 4.1% over the last year.

We'd prefer higher revenue growth, but we're happy with the modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Federal Agricultural Mortgage Corporation Been A Good Investment?

We think that the total shareholder return of 40%, over three years, would leave most Federal Agricultural Mortgage Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Federal Agricultural Mortgage that investors should look into moving forward.

Switching gears from Federal Agricultural Mortgage, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.