What Can We Make Of First Financial Bankshares' (NASDAQ:FFIN) CEO Compensation?

Simply Wall St
October 25, 2020

This article will reflect on the compensation paid to F. Dueser who has served as CEO of First Financial Bankshares, Inc. (NASDAQ:FFIN) since 2001. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for First Financial Bankshares

Comparing First Financial Bankshares, Inc.'s CEO Compensation With the industry

Our data indicates that First Financial Bankshares, Inc. has a market capitalization of US$4.4b, and total annual CEO compensation was reported as US$1.9m for the year to December 2019. Notably, that's an increase of 30% over the year before. In particular, the salary of US$1.00m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$4.5m. This suggests that F. Dueser is paid below the industry median. Furthermore, F. Dueser directly owns US$64m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$1.0m US$921k 51%
Other US$945k US$576k 49%
Total CompensationUS$1.9m US$1.5m100%

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. It's interesting to note that First Financial Bankshares pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

NasdaqGS:FFIN CEO Compensation October 25th 2020

A Look at First Financial Bankshares, Inc.'s Growth Numbers

First Financial Bankshares, Inc. has seen its earnings per share (EPS) increase by 16% a year over the past three years. It achieved revenue growth of 13% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has First Financial Bankshares, Inc. Been A Good Investment?

We think that the total shareholder return of 39%, over three years, would leave most First Financial Bankshares, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As we noted earlier, First Financial Bankshares pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think F. deserves a raise!

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in First Financial Bankshares we think you should know about.

Important note: First Financial Bankshares 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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