Frank Holding has been the CEO of First Citizens BancShares, Inc. (NASDAQ:FCNC.A) since 2008, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also assess whether First Citizens BancShares pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for First Citizens BancShares
Comparing First Citizens BancShares, Inc.’s CEO Compensation With the industry
According to our data, First Citizens BancShares, Inc. has a market capitalization of US$4.1b, and paid its CEO total annual compensation worth US$4.0m over the year to December 2019. That’s a notable increase of 43% on last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$964k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$4.6m. From this we gather that Frank Holding is paid around the median for CEOs in the industry. Moreover, Frank Holding also holds US$1.2b worth of First Citizens BancShares stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$964k | US$955k | 24% |
| Other | US$3.1m | US$1.9m | 76% |
| Total Compensation | US$4.0m | US$2.8m | 100% |
Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. In First Citizens BancShares’ case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
First Citizens BancShares, Inc.’s Growth
First Citizens BancShares, Inc. has seen its earnings per share (EPS) increase by 17% a year over the past three years. In the last year, its revenue is up 5.0%.
Shareholders would be glad to know that the company has improved itself over the last few years. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has First Citizens BancShares, Inc. Been A Good Investment?
With a total shareholder return of 25% over three years, First Citizens BancShares, Inc. shareholders would, in general, be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
To Conclude…
As previously discussed, Frank is compensated close to the median for companies of its size, and which belong to the same industry. But earnings growth for the company has been strong over the last three years, though shareholder returns in comparison haven’t been as impressive. So considering these factors, we think the compensation is probably quite reasonable, but investor returns need a boost moving forward.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We’ve identified 1 warning sign for First Citizens BancShares that investors should be aware of in a dynamic business environment.
Important note: First Citizens BancShares is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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