Shareholders May Be More Conservative With First Foundation Inc.'s (NASDAQ:FFWM) CEO Compensation For Now

By
Simply Wall St
Published
May 18, 2021
NasdaqGM:FFWM
Source: Shutterstock

CEO Scott Farris Kavanaugh has done a decent job of delivering relatively good performance at First Foundation Inc. (NASDAQ:FFWM) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 25 May 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for First Foundation

Comparing First Foundation Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that First Foundation Inc. has a market capitalization of US$1.1b, and reported total annual CEO compensation of US$2.2m for the year to December 2020. Notably, that's an increase of 12% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$856k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$1.5m. This suggests that Scott Farris Kavanaugh is paid more than the median for the industry. Furthermore, Scott Farris Kavanaugh directly owns US$31m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$856k US$856k 39%
Other US$1.3m US$1.1m 61%
Total CompensationUS$2.2m US$2.0m100%

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. Our data reveals that First Foundation allocates salary more or less in line with the wider market. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqGM:FFWM CEO Compensation May 19th 2021

First Foundation Inc.'s Growth

First Foundation Inc.'s earnings per share (EPS) grew 35% per year over the last three years. Its revenue is up 22% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Foundation Inc. Been A Good Investment?

We think that the total shareholder return of 36%, over three years, would leave most First Foundation 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...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for First Foundation that you should be aware of before investing.

Switching gears from First Foundation, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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