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Is Lake Shore Bancorp, Inc.’s (NASDAQ:LSBK) CEO Pay Fair?

Simply Wall St

Dan Reininga has been the CEO of Lake Shore Bancorp, Inc. (NASDAQ:LSBK) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Lake Shore Bancorp

How Does Dan Reininga’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Lake Shore Bancorp, Inc. has a market cap of US$91m, and is paying total annual CEO compensation of US$550k. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$313k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO compensation to be US$418k.

Thus we can conclude that Dan Reininga receives more in total compensation than the median of a group of companies in the same market, and of similar size to Lake Shore Bancorp, Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Lake Shore Bancorp, below.

NasdaqGM:LSBK CEO Compensation, February 28th 2019

Is Lake Shore Bancorp, Inc. Growing?

Lake Shore Bancorp, Inc. has reduced its earnings per share by an average of 6.3% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 5.8% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don’t have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Lake Shore Bancorp, Inc. Been A Good Investment?

With a total shareholder return of 22% over three years, Lake Shore Bancorp, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared total CEO remuneration at Lake Shore Bancorp, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

While shareholder returns are acceptable, they don’t delight. So we doubt many shareholders would consider the CEO pay to be particularly modest! So you may want to check if insiders are buying Lake Shore Bancorp shares with their own money (free access).

Important note: Lake Shore 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.