Stephen J. Smith is the CEO of First National Financial Corporation (TSE:FN). 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Stephen J. Smith's Compensation Compare With Similar Sized Companies?
According to our data, First National Financial Corporation has a market capitalization of CA$1.3b, and paid its CEO total annual compensation worth CA$763k over the year to December 2018. Notably, the salary of CA$750k is the vast majority of the CEO compensation. We examined companies with market caps from CA$579m to CA$2.3b, and discovered that the median CEO total compensation of that group was CA$2.4m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where First National Financial stands. On a sector level, around 49% of total compensation represents salary and 51% is other remuneration. First National Financial pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay.
At first glance this seems like a real positive for shareholders, since Stephen J. Smith is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business. You can see a visual representation of the CEO compensation at First National Financial, below.
Is First National Financial Corporation Growing?
First National Financial Corporation has reduced its earnings per share by an average of 12% a year, over the last three years (measured with a line of best fit). Its revenue is up 9.5% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has First National Financial Corporation Been A Good Investment?
First National Financial Corporation has generated a total shareholder return of 5.7% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
It appears that First National Financial Corporation remunerates its CEO below most similar sized companies.
Shareholders should note that compensation for Stephen J. Smith is under the median of a group of similar sized companies. But the business isn't growing earnings per share, and the returns to shareholders haven't been wonderful. We would like to see EPS growth from the business, although we wouldn't say the CEO pay is high. Shifting gears from CEO pay for a second, we've picked out 1 warning sign for First National Financial that investors should be aware of in a dynamic business environment.
If you want to buy a stock that is better than First National Financial, this free list of high return, low debt companies is a great place to look.
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