In 2014 Joe Dively was appointed CEO of First Mid Bancshares, Inc. (NASDAQ:FMBH). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Joe Dively’s Compensation Compare With Similar Sized Companies?
According to our data, First Mid Bancshares, Inc. has a market capitalization of US$526m, and pays its CEO total annual compensation worth US$1.1m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$414k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.9m.
A first glance this seems like a real positive for shareholders, since Joe Dively 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.
The graphic below shows how CEO compensation at First Mid Bancshares has changed from year to year.
Is First Mid Bancshares, Inc. Growing?
First Mid Bancshares, Inc. has increased its earnings per share (EPS) by an average of 10% a year, over the last three years (using a line of best fit). Its revenue is up 38% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business.
Has First Mid Bancshares, Inc. Been A Good Investment?
Most shareholders would probably be pleased with First Mid Bancshares, Inc. for providing a total return of 38% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
It appears that First Mid Bancshares, Inc. remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Joe Dively deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling First Mid Bancshares (free visualization of insider trades).
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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.