The performance at Ames National Corporation (NASDAQ:ATLO) has been rather lacklustre of late and shareholders may be wondering what CEO John Nelson is planning to do about this. At the next AGM coming up on 28 April 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.
How Does Total Compensation For John Nelson Compare With Other Companies In The Industry?
Our data indicates that Ames National Corporation has a market capitalization of US$230m, and total annual CEO compensation was reported as US$459k for the year to December 2020. That's a modest increase of 6.9% on the prior year. In particular, the salary of US$367.6k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$777k. This suggests that John Nelson is paid below the industry median. Moreover, John Nelson also holds US$291k worth of Ames National stock directly under their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | US$368k | US$345k | 80% |
| Other | US$92k | US$84k | 20% |
| Total Compensation | US$459k | US$429k | 100% |
On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. According to our research, Ames National has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Ames National Corporation's Growth Numbers
Ames National Corporation's earnings per share (EPS) grew 15% per year over the last three years. In the last year, its revenue is up 17%.
This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Ames National Corporation Been A Good Investment?
With a three year total loss of 0.9% for the shareholders, Ames National Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
The uninspiring share price returns contrasts with the strong EPS growth, suggesting that there may be other factors at play causing it to diverge from fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.
If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Ames National.
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.
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.
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