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How Should Investors React To German American Bancorp's (NASDAQ:GABC) CEO Pay?

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Simply Wall St
·3 min read
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Mark Schroeder has been the CEO of German American Bancorp, Inc. (NASDAQ:GABC) since 1999, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether German American Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for German American Bancorp

How Does Total Compensation For Mark Schroeder Compare With Other Companies In The Industry?

Our data indicates that German American Bancorp, Inc. has a market capitalization of US$757m, and total annual CEO compensation was reported as US$1.0m for the year to December 2019. That's a notable increase of 11% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$430k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$1.9m. This suggests that Mark Schroeder is paid below the industry median. Furthermore, Mark Schroeder directly owns US$4.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$430k

US$390k

42%

Other

US$594k

US$532k

58%

Total Compensation

US$1.0m

US$922k

100%

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. There isn't a significant difference between German American Bancorp and the broader market, in terms of salary allocation in the overall compensation package. 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

A Look at German American Bancorp, Inc.'s Growth Numbers

German American Bancorp, Inc. has seen its earnings per share (EPS) increase by 6.5% a year over the past three years. In the last year, its revenue is up 11%.

This revenue growth could really point to a brighter future. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. 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 German American Bancorp, Inc. Been A Good Investment?

Since shareholders would have lost about 12% over three years, some German American Bancorp, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Mark is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. But then, EPS growth is lacking and so are the returns to shareholders. So while we would not say that Mark is generously paid, it would be good to see an improvement in business performance before there is talk about a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for German American Bancorp that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.

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