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This article will reflect on the compensation paid to Kevin Riley who has served as CEO of First Interstate BancSystem, Inc. (NASDAQ:FIBK) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Kevin Riley Compare With Other Companies In The Industry?
According to our data, First Interstate BancSystem, Inc. has a market capitalization of US$1.9b, and paid its CEO total annual compensation worth US$2.5m over the year to December 2019. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$784k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$3.6m. So it looks like First Interstate BancSystem compensates Kevin Riley in line with the median for the industry. What's more, Kevin Riley holds US$2.3m worth of shares in the company in their own name.
On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. In First Interstate BancSystem's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at First Interstate BancSystem, Inc.'s Growth Numbers
First Interstate BancSystem, Inc.'s earnings per share (EPS) grew 5.5% per year over the last three years. It achieved revenue growth of 7.5% over the last year.
We'd prefer higher revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has First Interstate BancSystem, Inc. Been A Good Investment?
Since shareholders would have lost about 14% over three years, some First Interstate BancSystem, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, First Interstate BancSystem, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But with negative shareholder returns and unimpressive earnings growth, shareholders will surely be disturbed. Although we wouldn't say CEO compensation is exceptionally high, it isn't very low either. Shareholders might want to see substantial improvements in returns before agreeing that Kevin deserves a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for First Interstate BancSystem you should be aware of, and 1 of them is potentially serious.
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.
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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