How Should Investors Feel About MidWestOne Financial Group's (NASDAQ:MOFG) CEO Remuneration?
This article will reflect on the compensation paid to Charlie Funk who has served as CEO of MidWestOne Financial Group, Inc. (NASDAQ:MOFG) since 2008. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for MidWestOne Financial Group.
Check out our latest analysis for MidWestOne Financial Group
How Does Total Compensation For Charlie Funk Compare With Other Companies In The Industry?
Our data indicates that MidWestOne Financial Group, Inc. has a market capitalization of US$406m, and total annual CEO compensation was reported as US$952k for the year to December 2019. We note that's an increase of 23% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$460k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.1m. From this we gather that Charlie Funk is paid around the median for CEOs in the industry. Moreover, Charlie Funk also holds US$2.8m worth of MidWestOne Financial Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$460k | US$437k | 48% |
Other | US$493k | US$337k | 52% |
Total Compensation | US$952k | US$774k | 100% |
On an industry level, around 43% of total compensation represents salary and 57% is other remuneration. According to our research, MidWestOne Financial Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
MidWestOne Financial Group, Inc.'s Growth
MidWestOne Financial Group, Inc. has reduced its earnings per share by 54% a year over the last three years. In the last year, its revenue is up 6.4%.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 MidWestOne Financial Group, Inc. Been A Good Investment?
With a three year total loss of 22% for the shareholders, MidWestOne Financial Group, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we noted earlier, MidWestOne Financial Group pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for MidWestOne Financial Group that you should be aware of before investing.
Important note: MidWestOne Financial Group 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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