Is First Foundation Inc.'s (NASDAQ:FFWM) CEO Pay Justified?
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Scott Kavanaugh has been the CEO of First Foundation Inc. (NASDAQ:FFWM) since 2009. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for First Foundation
How Does Scott Kavanaugh's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that First Foundation Inc. has a market cap of US$600m, and is paying total annual CEO compensation of US$1.6m. (This figure is for the year to December 2018). That's a modest increase of 3.0% on the prior year year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$706k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.7m.
So Scott Kavanaugh receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see, below, how CEO compensation at First Foundation has changed over time.
Is First Foundation Inc. Growing?
First Foundation Inc. has increased its earnings per share (EPS) by an average of 16% a year, over the last three years (using a line of best fit). It achieved revenue growth of 24% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.
Has First Foundation Inc. Been A Good Investment?
First Foundation Inc. has served shareholders reasonably well, with a total return of 27% 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...
Scott Kavanaugh is paid around the same as most CEOs of similar size companies.
Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. As a result of these considerations, I would suggest the CEO pay is reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling First Foundation (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
