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Is Village Bank and Trust Financial Corp.’s (NASDAQ:VBFC) CEO Being Overpaid?

Bill Foster became the CEO of Village Bank and Trust Financial Corp. (NASDAQ:VBFC) in 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Village Bank and Trust Financial

How Does Bill Foster’s Compensation Compare With Similar Sized Companies?

Our data indicates that Village Bank and Trust Financial Corp. is worth US$49m, and total annual CEO compensation is US$366k. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$288k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO compensation to be US$300k.

So Bill Foster receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at Village Bank and Trust Financial has changed over time.

NasdaqCM:VBFC CEO Compensation December 14th 18

Is Village Bank and Trust Financial Corp. Growing?

Over the last three years Village Bank and Trust Financial Corp. has shrunk its earnings per share by an average of 62% per year. In the last year, its revenue is up 12%.

Unfortunately, earnings per share have trended lower over the last three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Village Bank and Trust Financial Corp. Been A Good Investment?

Most shareholders would probably be pleased with Village Bank and Trust Financial Corp. for providing a total return of 80% over three years. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.

In Summary…

Bill Foster is paid around the same as most CEOs of similar size companies.

We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we think most shareholders wouldn’t be too worried about CEO compensation, which is close to the median for similar sized companies. Shareholders may want to check for free if Village Bank and Trust Financial insiders are buying or selling shares.

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.