What We Learned About OFG Bancorp's (NYSE:OFG) CEO Pay
José Fernández has been the CEO of OFG Bancorp (NYSE:OFG) since 2004, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for OFG Bancorp.
See our latest analysis for OFG Bancorp
Comparing OFG Bancorp's CEO Compensation With the industry
At the time of writing, our data shows that OFG Bancorp has a market capitalization of US$858m, and reported total annual CEO compensation of US$2.9m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$865k.
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. Hence, we can conclude that José Fernández is remunerated higher than the industry median. Furthermore, José Fernández directly owns US$4.0m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$865k | US$865k | 30% |
Other | US$2.0m | US$1.9m | 70% |
Total Compensation | US$2.9m | US$2.8m | 100% |
On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. It's interesting to note that OFG Bancorp allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
OFG Bancorp's Growth
Earnings per share at OFG Bancorp are much the same as they were three years ago, albeit slightly lower. It achieved revenue growth of 21% over the last year.
The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 OFG Bancorp Been A Good Investment?
We think that the total shareholder return of 90%, over three years, would leave most OFG Bancorp shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As previously discussed, José is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Still, shareholder returns over the last three years,and recent revenue growth have been trending northwards. Importantly though, EPS has not been growing over the same stretch. All things considered, although EPS growth would've been nice, the positive investor returns and revenue growth lead us to believe José is appropriately paid.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 4 warning signs for OFG 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.
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