Should Shareholders Reconsider Financial Institutions, Inc.'s (NASDAQ:FISI) CEO Compensation Package?

Key Insights

• Financial Institutions' Annual General Meeting to take place on 5th of June
• Total pay for CEO Marty Birmingham includes US$713.9k salary
• Total compensation is 40% above industry average
• Financial Institutions' EPS declined by 11% over the past three years while total shareholder loss over the past three years was 37%

The results at Financial Institutions, Inc. (NASDAQ:FISI) have been quite disappointing recently and CEO Marty Birmingham bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 5th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Financial Institutions

Comparing Financial Institutions, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Financial Institutions, Inc. has a market capitalization of US$274m, and reported total annual CEO compensation of US$1.5m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$714k.

On comparing similar companies from the American Banks industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$1.1m. Hence, we can conclude that Marty Birmingham is remunerated higher than the industry median. Moreover, Marty Birmingham also holds US$2.5m worth of Financial Institutions stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$714k	US$692k	48%
Other	US$759k	US$799k	52%
Total Compensation	US$1.5m	US$1.5m	100%

On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. Our data reveals that Financial Institutions 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.

A Look at Financial Institutions, Inc.'s Growth Numbers

Financial Institutions, Inc. has reduced its earnings per share by 11% a year over the last three years. It achieved revenue growth of 3.9% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Financial Institutions, Inc. Been A Good Investment?

With a total shareholder return of -37% over three years, Financial Institutions, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

Whatever your view on compensation, you might want to check if insiders are buying or selling Financial Institutions shares (free trial).

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.