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Is First Merchants Corporation’s (NASDAQ:FRME) CEO Overpaid Relative To Its Peers?

Simply Wall St

Mike Rechin has been the CEO of First Merchants Corporation (NASDAQ:FRME) since 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for First Merchants

How Does Mike Rechin’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that First Merchants Corporation has a market cap of US$1.9b, and is paying total annual CEO compensation of US$1.9m. (This is based on the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$533k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO compensation was US$3.5m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at First Merchants has changed from year to year.

NasdaqGS:FRME CEO Compensation, March 11th 2019

Is First Merchants Corporation Growing?

First Merchants Corporation has increased its earnings per share (EPS) by an average of 20% a year, over the last three years (using a line of best fit). Its revenue is up 20% over last year.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has First Merchants Corporation Been A Good Investment?

Most shareholders would probably be pleased with First Merchants Corporation for providing a total return of 75% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

It appears that First Merchants Corporation remunerates its CEO below most similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. And given most shareholders are probably very happy with recent returns, you might even think that Mike Rechin deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling First Merchants (free visualization of insider trades).

If you want to buy a stock that is better than First Merchants, this free list of high return, low debt companies is a great place to look.

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.