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The share price of CBTX, Inc. (NASDAQ:CBTX) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. The upcoming AGM on 19 May 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Comparing CBTX, Inc.'s CEO Compensation With the industry
Our data indicates that CBTX, Inc. has a market capitalization of US$719m, and total annual CEO compensation was reported as US$1.5m for the year to December 2020. We note that's a decrease of 31% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$550k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$1.6m. From this we gather that Bob Franklin is paid around the median for CEOs in the industry. What's more, Bob Franklin holds US$8.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. CBTX sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at CBTX, Inc.'s Growth Numbers
CBTX, Inc. has reduced its earnings per share by 3.2% a year over the last three years. In the last year, its revenue is down 12%.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CBTX, Inc. Been A Good Investment?
With a total shareholder return of 2.7% over three years, CBTX, Inc. has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.
The flat share price growth combined with the the fact that earnings have failed to grow makes us wonder whether the share price will have any further strong momentum. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for CBTX that investors should be aware of in a dynamic business environment.
Switching gears from CBTX, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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