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In the past three years, shareholders of Old Second Bancorp, Inc. (NASDAQ:OSBC) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 18 May 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 Jim Eccher Compare With Other Companies In The Industry?
According to our data, Old Second Bancorp, Inc. has a market capitalization of US$401m, and paid its CEO total annual compensation worth US$1.3m over the year to December 2020. We note that's an increase of 14% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$567k.
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. So it looks like Old Second Bancorp compensates Jim Eccher in line with the median for the industry. Moreover, Jim Eccher also holds US$3.3m worth of Old Second Bancorp stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. Old Second Bancorp is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Old Second Bancorp, Inc.'s Growth
Old Second Bancorp, Inc. has seen its earnings per share (EPS) increase by 25% a year over the past three years. In the last year, its revenue is up 12%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Old Second Bancorp, Inc. Been A Good Investment?
Given the total shareholder loss of 3.7% over three years, many shareholders in Old Second Bancorp, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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. We identified 4 warning signs for Old Second Bancorp (1 is a bit concerning!) that you should be aware of before investing here.
Switching gears from Old Second Bancorp, 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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