Should You Worry About Premier Financial Bancorp, Inc.’s (NASDAQ:PFBI) CEO Pay Cheque?

In 2001, Bob Walker was appointed CEO of Premier Financial Bancorp, Inc. (NASDAQ:PFBI). 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.

Check out our latest analysis for Premier Financial Bancorp

How Does Bob Walker’s Compensation Compare With Similar Sized Companies?

According to our data, Premier Financial Bancorp, Inc. has a market capitalization of US$170m, and paid its CEO total annual compensation worth US$487k over the year to December 2019. That’s just a smallish increase of 2.3% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$350k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.4m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of Premier Financial Bancorp. Speaking on an industry level, we can see that nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. It’s interesting to note that Premier Financial Bancorp pays out a greater portion of remuneration through salary, in comparison to the wider industry.

At first glance this seems like a real positive for shareholders, since Bob Walker is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business. You can see, below, how CEO compensation at Premier Financial Bancorp has changed over time.

NasdaqGM:PFBI CEO Compensation May 18th 2020
NasdaqGM:PFBI CEO Compensation May 18th 2020

Is Premier Financial Bancorp, Inc. Growing?

On average over the last three years, Premier Financial Bancorp, Inc. has seen earnings per share (EPS) move in a favourable direction by 18% each year (using a line of best fit). Its revenue is up 6.8% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Premier Financial Bancorp, Inc. Been A Good Investment?

Since shareholders would have lost about 16% over three years, some Premier Financial Bancorp, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It looks like Premier Financial Bancorp, Inc. pays its CEO less than similar sized companies.

Many would consider this to indicate that the pay is modest since the business is growing. Unfortunately, some shareholders may be disappointed with their returns, given the company’s performance over the last three years. We’re not critical of the remuneration Bob Walker receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. Moving away from CEO compensation for the moment, we’ve identified 2 warning signs for Premier Financial Bancorp that you should be aware of before investing.

Important note: Premier Financial Bancorp may not be the best stock to buy. 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. Thank you for reading.