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Shareholders of Ohio Valley Banc Corp. (NASDAQ:OVBC) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 19 May 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing Ohio Valley Banc Corp.'s CEO Compensation With the industry
According to our data, Ohio Valley Banc Corp. has a market capitalization of US$110m, and paid its CEO total annual compensation worth US$739k over the year to December 2020. That's mostly flat as compared to the prior year's compensation. We note that the salary of US$374.9k makes up a sizeable portion of the total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$573k. So it looks like Ohio Valley Banc compensates Tom Wiseman in line with the median for the industry. Moreover, Tom Wiseman also holds US$652k worth of Ohio Valley Banc stock directly under their own name.
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. It's interesting to note that Ohio Valley Banc pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Ohio Valley Banc Corp.'s Growth
Over the past three years, Ohio Valley Banc Corp. has seen its earnings per share (EPS) grow by 18% per year. Its revenue is up 7.5% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Ohio Valley Banc Corp. Been A Good Investment?
Few Ohio Valley Banc Corp. shareholders would feel satisfied with the return of -49% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Ohio Valley Banc 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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