It's Unlikely That The CEO Of First Hawaiian, Inc. (NASDAQ:FHB) Will See A Huge Pay Rise This Year

Key Insights

• First Hawaiian will host its Annual General Meeting on 24th of April
• Total pay for CEO Bob Harrison includes US$1.03m salary
• The total compensation is similar to the average for the industry
• Over the past three years, First Hawaiian's EPS grew by 8.8% and over the past three years, the total loss to shareholders 14%

In the past three years, shareholders of First Hawaiian, Inc. (NASDAQ:FHB) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 24th of April. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for First Hawaiian

How Does Total Compensation For Bob Harrison Compare With Other Companies In The Industry?

According to our data, First Hawaiian, Inc. has a market capitalization of US$2.6b, and paid its CEO total annual compensation worth US$5.4m over the year to December 2023. We note that's an increase of 18% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On examining similar-sized companies in the American Banks 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$4.7m. From this we gather that Bob Harrison is paid around the median for CEOs in the industry. What's more, Bob Harrison holds US$7.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	19%
Other	US$4.3m	US$3.5m	81%
Total Compensation	US$5.4m	US$4.6m	100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. It's interesting to note that First Hawaiian allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

First Hawaiian, Inc.'s Growth

First Hawaiian, Inc.'s earnings per share (EPS) grew 8.8% per year over the last three years. In the last year, its revenue is up 2.4%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has First Hawaiian, Inc. Been A Good Investment?

With a three year total loss of 14% for the shareholders, First Hawaiian, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for First Hawaiian you should be aware of, and 1 of them is concerning.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.