Should Shareholders Reconsider Auburn National Bancorporation, Inc.'s (NASDAQ:AUBN) CEO Compensation Package?
Shareholders will probably not be too impressed with the underwhelming results at Auburn National Bancorporation, Inc. (NASDAQ:AUBN) recently. At the upcoming AGM on 11 May 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.
Check out our latest analysis for Auburn National Bancorporation
How Does Total Compensation For Bob Dumas Compare With Other Companies In The Industry?
Our data indicates that Auburn National Bancorporation, Inc. has a market capitalization of US$126m, and total annual CEO compensation was reported as US$420k for the year to December 2020. That's a notable decrease of 12% on last year. Notably, the salary which is US$335.1k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$574k. So it looks like Auburn National Bancorporation compensates Bob Dumas in line with the median for the industry. What's more, Bob Dumas holds US$1.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$335k | US$329k | 80% |
Other | US$85k | US$149k | 20% |
Total Compensation | US$420k | US$477k | 100% |
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. According to our research, Auburn National Bancorporation has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Auburn National Bancorporation, Inc.'s Growth Numbers
Over the last three years, Auburn National Bancorporation, Inc. has shrunk its earnings per share by 1.4% per year. It saw its revenue drop 1.3% over the last year.
The lack of EPS growth is certainly uninspiring. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Auburn National Bancorporation, Inc. Been A Good Investment?
Since shareholders would have lost about 11% over three years, some Auburn National Bancorporation, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Auburn National Bancorporation 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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