Shareholders will probably not be too impressed with the underwhelming results at First Financial Northwest, Inc. (NASDAQ:FFNW) recently. At the upcoming AGM on 09 June 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Comparing First Financial Northwest, Inc.'s CEO Compensation With the industry
Our data indicates that First Financial Northwest, Inc. has a market capitalization of US$138m, and total annual CEO compensation was reported as US$945k for the year to December 2020. Notably, that's an increase of 40% over the year before. Notably, the salary which is US$478.4k, represents a considerable chunk of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$567k. Hence, we can conclude that Joe Kiley is remunerated higher than the industry median. Moreover, Joe Kiley also holds US$399k worth of First Financial Northwest stock directly under their own name.
Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. First Financial Northwest pays out 51% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
First Financial Northwest, Inc.'s Growth
Over the last three years, First Financial Northwest, Inc. has shrunk its earnings per share by 8.4% per year. The trailing twelve months of revenue was pretty much the same as the prior period.
Few shareholders would be pleased to read that EPS have declined. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has First Financial Northwest, Inc. Been A Good Investment?
Since shareholders would have lost about 22% over three years, some First Financial Northwest, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for First Financial Northwest that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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.
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