F. Denardo has been the CEO of National Bankshares, Inc. (NASDAQ:NKSH) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For F. Denardo Compare With Other Companies In The Industry?
According to our data, National Bankshares, Inc. has a market capitalization of US$166m, and paid its CEO total annual compensation worth US$1.1m over the year to December 2019. That's a notable increase of 33% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$477k.
On examining similar-sized companies in the industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$887k. From this we gather that F. Denardo is paid around the median for CEOs in the industry. Furthermore, F. Denardo directly owns US$870k worth of shares in the company.
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 National Bankshares 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.
National Bankshares, Inc.'s Growth
National Bankshares, Inc.'s earnings per share (EPS) grew 5.7% per year over the last three years. In the last year, its revenue is down 3.0%.
We would prefer it if there was revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has National Bankshares, Inc. Been A Good Investment?
Since shareholders would have lost about 32% over three years, some National Bankshares, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, National Bankshares pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you place it against the backdrop of negative shareholder returns and flat EPS growth. We'd stop short of saying CEO compensation is inappropriate, but without an improvement in performance, it's sure to draw criticism. Shareholders will also not want to see performance improving before agreeing to any raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for National Bankshares that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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