Does Northrim BanCorp, Inc.'s (NASDAQ:NRIM) CEO Salary Reflect Performance?
In 2017, Joe Schierhorn was appointed CEO of Northrim BanCorp, Inc. (NASDAQ:NRIM). 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Northrim BanCorp
How Does Joe Schierhorn's Compensation Compare With Similar Sized Companies?
Our data indicates that Northrim BanCorp, Inc. is worth US$168m, and total annual CEO compensation was reported as US$811k for the year to December 2019. That's a fairly small increase of 5.2% on year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$411k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group 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 Northrim BanCorp. Talking in terms of the sector, salary represented approximately 43% of total compensation out of all the companies we analysed, while other remuneration made up 57% of the pie. Northrim BanCorp is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. You can see, below, how CEO compensation at Northrim BanCorp has changed over time.
Is Northrim BanCorp, Inc. Growing?
On average over the last three years, Northrim BanCorp, Inc. has seen earnings per share (EPS) move in a favourable direction by 14% each year (using a line of best fit). Its revenue is up 4.4% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Northrim BanCorp, Inc. Been A Good Investment?
Since shareholders would have lost about 4.0% over three years, some Northrim BanCorp, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
It looks like Northrim BanCorp, Inc. pays its CEO less than similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we don't think, Joe Schierhorn is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. On another note, Northrim BanCorp has 3 warning signs (and 2 which are significant) we think you should know about.
Important note: Northrim BanCorp may not be the best stock to buy. 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. 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.
