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Under the guidance of CEO Jack Clancy, Enterprise Bancorp, Inc. (NASDAQ:EBTC) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 04 May 2021. Here is our take on why we think the CEO compensation looks appropriate.
Comparing Enterprise Bancorp, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Enterprise Bancorp, Inc. has a market capitalization of US$411m, and reported total annual CEO compensation of US$1.0m for the year to December 2020. That's slightly lower by 3.2% over the previous year. In particular, the salary of US$525.9k, makes up a fairly large portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$1.1m. This suggests that Enterprise Bancorp remunerates its CEO largely in line with the industry average. Moreover, Jack Clancy also holds US$5.9m worth of Enterprise 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 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. According to our research, Enterprise Bancorp has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Enterprise Bancorp, Inc.'s Growth
Enterprise Bancorp, Inc.'s earnings per share (EPS) grew 21% per year over the last three years. Its revenue is up 15% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Enterprise Bancorp, Inc. Been A Good Investment?
With a total shareholder return of 1.3% over three years, Enterprise Bancorp, Inc. has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Enterprise Bancorp that investors should be aware of in a dynamic business environment.
Important note: Enterprise Bancorp 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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