In 2010 Jay Sidhu was appointed CEO of Customers Bancorp, Inc. (NYSE:CUBI). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Jay Sidhu's Compensation Compare With Similar Sized Companies?
Our data indicates that Customers Bancorp, Inc. is worth US$704m, and total annual CEO compensation was reported as US$1.8m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$681k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.6m.
A first glance this seems like a real positive for shareholders, since Jay Sidhu is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at Customers Bancorp, below.
Is Customers Bancorp, Inc. Growing?
Over the last three years Customers Bancorp, Inc. has shrunk its earnings per share by an average of 21% per year (measured with a line of best fit). In the last year, its revenue changed by just 0.6%.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Customers Bancorp, Inc. Been A Good Investment?
Since shareholders would have lost about 34% over three years, some Customers Bancorp, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
It appears that Customers Bancorp, Inc. remunerates its CEO below most similar sized companies.
Jay Sidhu is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Whatever your view on compensation, you might want to check if insiders are buying or selling Customers Bancorp shares (free trial).
Important note: Customers Bancorp 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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