Key Insights

• ChoiceOne Financial Services' Annual General Meeting to take place on 29th of May
• Salary of US$468.0k is part of CEO Kelly Potes's total remuneration
• Total compensation is 31% below industry average
• Over the past three years, ChoiceOne Financial Services' EPS grew by 5.0% and over the past three years, the total shareholder return was 19%

Shareholders will be pleased by the robust performance of ChoiceOne Financial Services, Inc. (NASDAQ:COFS) recently and this will be kept in mind in the upcoming AGM on 29th of May. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

How Does Total Compensation For Kelly Potes Compare With Other Companies In The Industry?

Our data indicates that ChoiceOne Financial Services, Inc. has a market capitalization of US$209m, and total annual CEO compensation was reported as US$722k for the year to December 2023. Notably, that's an increase of 12% over the year before. In particular, the salary of US$468.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the American Banks industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$1.0m. Accordingly, ChoiceOne Financial Services pays its CEO under the industry median. What's more, Kelly Potes holds US$1.0m worth of shares in the company in their own name.

On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. ChoiceOne Financial Services pays out 65% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at ChoiceOne Financial Services, Inc.'s Growth Numbers

Over the past three years, ChoiceOne Financial Services, Inc. has seen its earnings per share (EPS) grow by 5.0% per year. In the last year, its revenue is down 1.4%.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has ChoiceOne Financial Services, Inc. Been A Good Investment?

ChoiceOne Financial Services, Inc. has served shareholders reasonably well, with a total return of 19% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

The company's overall performance, while not bad, could be better. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

So you may want to check if insiders are buying ChoiceOne Financial Services shares with their own money (free access).

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. 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.