Yahoo Finance Here's Why Shareholders May Want To Be Cautious With Increasing Enterprise Financial Services Corp's (NASDAQ:EFSC) CEO Pay Packet
Key Insights
Enterprise Financial Services' Annual General Meeting to take place on 1st of May
Salary of US$861.4k is part of CEO Jim Lally's total remuneration
The total compensation is similar to the average for the industry
Enterprise Financial Services' three-year loss to shareholders was 16% while its EPS grew by 13% over the past three years
In the past three years, the share price of Enterprise Financial Services Corp (NASDAQ:EFSC) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 1st of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Enterprise Financial Services
Comparing Enterprise Financial Services Corp's CEO Compensation With The Industry
Our data indicates that Enterprise Financial Services Corp has a market capitalization of US$1.5b, and total annual CEO compensation was reported as US$3.4m for the year to December 2023. We note that's a decrease of 17% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$861k.
On examining similar-sized companies in the American Banks industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.0m. This suggests that Enterprise Financial Services remunerates its CEO largely in line with the industry average. Moreover, Jim Lally also holds US$4.5m worth of Enterprise Financial Services stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$861k | US$784k | 25% |
Other | US$2.6m | US$3.4m | 75% |
Total Compensation | US$3.4m | US$4.2m | 100% |
On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. Enterprise Financial Services pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Enterprise Financial Services Corp's Growth Numbers
Enterprise Financial Services Corp has seen its earnings per share (EPS) increase by 13% a year over the past three years. In the last year, its revenue is up 3.8%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Enterprise Financial Services Corp Been A Good Investment?
With a three year total loss of 16% for the shareholders, Enterprise Financial Services Corp would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
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. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Enterprise Financial Services that investors should look into moving forward.
Important note: Enterprise Financial Services is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
