Should You Worry About Orrstown Financial Services, Inc.'s (NASDAQ:ORRF) CEO Salary Level?
Tom Quinn has been the CEO of Orrstown Financial Services, Inc. (NASDAQ:ORRF) since 2009. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Orrstown Financial Services
How Does Tom Quinn's Compensation Compare With Similar Sized Companies?
According to our data, Orrstown Financial Services, Inc. has a market capitalization of US$155m, and paid its CEO total annual compensation worth US$1.4m over the year to December 2019. That's actually a decrease on the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$530k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.4m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Orrstown Financial Services. Speaking on an industry level, we can see that nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Our data reveals that Orrstown Financial Services allocates salary in line with the wider market.
So Tom Quinn is paid around the average of 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. The graphic below shows how CEO compensation at Orrstown Financial Services has changed from year to year.
Is Orrstown Financial Services, Inc. Growing?
On average over the last three years, Orrstown Financial Services, Inc. has seen earnings per share (EPS) move in a favourable direction by 18% each year (using a line of best fit). In the last year, its revenue is up 37%.
This demonstrates that the company has been improving recently. A good result. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.
Has Orrstown Financial Services, Inc. Been A Good Investment?
Given the total loss of 30% over three years, many shareholders in Orrstown Financial Services, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
Tom Quinn is paid around what is normal for the leaders of comparable size companies.
We like that the company is growing EPS, but it's disappointing to see negative shareholder returns over three years. We'd be surprised if shareholders want to see a pay rise for the CEO, but we'd stop short of calling their pay too generous. Shifting gears from CEO pay for a second, we've spotted 4 warning signs for Orrstown Financial Services you should be aware of, and 1 of them is a bit unpleasant.
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.
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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. Thank you for reading.
