U.S. Markets open in 5 hrs 40 mins

Is Territorial Bancorp Inc.'s (NASDAQ:TBNK) CEO Pay Justified?

Simply Wall St

Allan Kitagawa became the CEO of Territorial Bancorp Inc. (NASDAQ:TBNK) in 1986. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Territorial Bancorp

How Does Allan Kitagawa's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Territorial Bancorp Inc. has a market cap of US$282m, and reported total annual CEO compensation of US$1.8m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$851k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.1m.

Thus we can conclude that Allan Kitagawa receives more in total compensation than the median of a group of companies in the same market, and of similar size to Territorial Bancorp Inc.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Territorial Bancorp has changed from year to year.

NasdaqGS:TBNK CEO Compensation, January 20th 2020

Is Territorial Bancorp Inc. Growing?

Over the last three years Territorial Bancorp Inc. has grown its earnings per share (EPS) by an average of 9.8% per year (using a line of best fit). In the last year, its revenue is up 5.5%.

I'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. It could be important to check this free visual depiction of what analysts expect for the future.

Has Territorial Bancorp Inc. Been A Good Investment?

Territorial Bancorp Inc. has generated a total shareholder return of 7.5% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared the total CEO remuneration paid by Territorial Bancorp Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Whatever your view on compensation, you might want to check if insiders are buying or selling Territorial Bancorp shares (free trial).

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

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.

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. Thank you for reading.