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Is First Guaranty Bancshares, Inc.’s (NASDAQ:FGBI) CEO Overpaid Relative To Its Peers?

Tammie Asher

Alton Lewis has been the CEO of First Guaranty Bancshares, Inc. (NASDAQ:FGBI) since 2009. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. 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.

View our latest analysis for First Guaranty Bancshares

How Does Alton Lewis’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that First Guaranty Bancshares, Inc. has a market cap of US$185m, and is paying total annual CEO compensation of US$483k. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$323k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO compensation was US$1.0m.

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 a visual representation of the CEO compensation at First Guaranty Bancshares, below.

NasdaqGM:FGBI CEO Compensation December 24th 18

Is First Guaranty Bancshares, Inc. Growing?

Over the last three years First Guaranty Bancshares, Inc. has shrunk its earnings per share by an average of 8.0% per year. Its revenue is up 12% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has First Guaranty Bancshares, Inc. Been A Good Investment?

First Guaranty Bancshares, Inc. has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

It looks like First Guaranty Bancshares, Inc. pays its CEO less than similar sized companies.

The compensation paid to Alton Lewis is lower than is usual at similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. So while shareholders shouldn’t be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling First Guaranty Bancshares (free visualization of insider trades).

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.