Should You Worry About Franklin Financial Network, Inc.’s (NYSE:FSB) CEO Pay?
In 2014 Richard Herrington was appointed CEO of Franklin Financial Network, Inc. (NYSE:FSB). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Franklin Financial Network
How Does Richard Herrington’s Compensation Compare With Similar Sized Companies?
Our data indicates that Franklin Financial Network, Inc. is worth US$396m, and total annual CEO compensation is US$885k. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$531k. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO compensation was US$1.6m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Franklin Financial Network has changed over time.
Is Franklin Financial Network, Inc. Growing?
On average over the last three years, Franklin Financial Network, Inc. has grown earnings per share (EPS) by 11% each year. Its revenue is up 11% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has Franklin Financial Network, Inc. Been A Good Investment?
Since shareholders would have lost about 16% over three years, some Franklin Financial Network, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary…
Franklin Financial Network, Inc. is currently paying its CEO below what is normal for companies of its size. Since the business is growing, many would argue this suggests the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we don’t think, Richard Herrington is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.
When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. So you may want to check if insiders are buying Franklin Financial Network shares with their own money (free access).
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
