Denis Sheahan became the CEO of Cambridge Bancorp (NASDAQ:CATC) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Cambridge Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Denis Sheahan Compare With Other Companies In The Industry?
Our data indicates that Cambridge Bancorp has a market capitalization of US$296m, and total annual CEO compensation was reported as US$2.0m for the year to December 2019. That's a modest increase of 5.5% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$508k.
On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$940k. Accordingly, our analysis reveals that Cambridge Bancorp pays Denis Sheahan north of the industry median. Moreover, Denis Sheahan also holds US$1.7m worth of Cambridge Bancorp stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. Cambridge Bancorp pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Cambridge Bancorp's Growth Numbers
Cambridge Bancorp's earnings per share (EPS) grew 7.1% per year over the last three years. In the last year, its revenue is up 21%.
This revenue growth could really point to a brighter future. And, while modest, the earnings per share growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Cambridge Bancorp Been A Good Investment?
With a three year total loss of 10% for the shareholders, Cambridge Bancorp would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Cambridge Bancorp pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Over the last three years, shareholder returns have been downright disappointing for Cambridge Bancorp, and although earnings growth is steady, it hasn't set the world on fire. This doesn't look great when you consider Denis is taking home compensation north of the industry average. With such poor returns, we would understand if shareholders had concerns related to the CEO's pay.
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 1 warning sign for Cambridge Bancorp that you should be aware of before investing.
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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