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Is First Guaranty Bancshares, Inc. (NASDAQ:FGBI) Excessively Paying Its CEO?

Simply Wall St

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In 2009 Alton Lewis was appointed CEO of First Guaranty Bancshares, Inc. (NASDAQ:FGBI). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for First Guaranty Bancshares

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

According to our data, First Guaranty Bancshares, Inc. has a market capitalization of US$183m, and pays its CEO total annual compensation worth US$474k. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$333k. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.2m.

A first glance this seems like a real positive for shareholders, since Alton Lewis is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at First Guaranty Bancshares has changed over time.

NasdaqGM:FGBI CEO Compensation, July 4th 2019

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 5.2% per year (measured with a line of best fit). Its revenue is up 4.9% 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

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

I think that the total shareholder return of 55%, over three years, would leave most First Guaranty Bancshares, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It appears that First Guaranty Bancshares, Inc. remunerates its CEO below most similar sized companies.

It's well worth noting that while Alton Lewis is paid less than most company leaders (at similar sized companies), there isn't much EPS growth. Having said that, returns to shareholders have been great. Although we could see higher EPS growth, we'd argue the remuneration is not an issue, based on these observations. Whatever your view on compensation, you might want to check if insiders are buying or selling First Guaranty Bancshares shares (free trial).

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.

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.