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In the past three years, the share price of Orrstown Financial Services, Inc. (NASDAQ:ORRF) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 27 April 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
How Does Total Compensation For Tom Quinn Compare With Other Companies In The Industry?
At the time of writing, our data shows that Orrstown Financial Services, Inc. has a market capitalization of US$242m, and reported total annual CEO compensation of US$1.7m for the year to December 2020. That's a notable increase of 34% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$535k.
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$772k. Accordingly, our analysis reveals that Orrstown Financial Services, Inc. pays Tom Quinn north of the industry median. What's more, Tom Quinn holds US$1.4m worth of shares in the company in their own name.
On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that Orrstown Financial Services allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Orrstown Financial Services, Inc.'s Growth Numbers
Over the past three years, Orrstown Financial Services, Inc. has seen its earnings per share (EPS) grow by 34% per year. In the last year, its revenue is up 9.0%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Orrstown Financial Services, Inc. Been A Good Investment?
With a three year total loss of 10% for the shareholders, Orrstown Financial Services, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Orrstown Financial Services you should be aware of, and 1 of them can't be ignored.
Important note: Orrstown Financial Services is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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