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Why Enterprise Bancorp, Inc.'s (NASDAQ:EBTC) CEO Pay Matters To You

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Simply Wall St
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Jack Clancy became the CEO of Enterprise Bancorp, Inc. (NASDAQ:EBTC) in 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Enterprise Bancorp

How Does Jack Clancy's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Enterprise Bancorp, Inc. has a market cap of US$391m, and reported total annual CEO compensation of US$1.0m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$489k. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.7m.

Most shareholders would consider it a positive that Jack Clancy takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Enterprise Bancorp has changed from year to year.

NasdaqGS:EBTC CEO Compensation, December 19th 2019
NasdaqGS:EBTC CEO Compensation, December 19th 2019

Is Enterprise Bancorp, Inc. Growing?

On average over the last three years, Enterprise Bancorp, Inc. has grown earnings per share (EPS) by 18% each year (using a line of best fit). Its revenue is up 5.4% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Enterprise Bancorp, Inc. Been A Good Investment?

With a three year total loss of 5.1%, Enterprise Bancorp, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

It appears that Enterprise Bancorp, Inc. remunerates its CEO below most similar sized companies.

Many would consider this to indicate that the pay is modest since the business is growing. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we don't think, Jack Clancy is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Enterprise Bancorp.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.