What Does First Bancorp's (NASDAQ:FNLC) CEO Pay Reveal?

Simply Wall St
July 26, 2020

This article will reflect on the compensation paid to Tony McKim who has served as CEO of The First Bancorp, Inc. (NASDAQ:FNLC) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for First Bancorp.

Check out our latest analysis for First Bancorp

Comparing The First Bancorp, Inc.'s CEO Compensation With the industry

Our data indicates that The First Bancorp, Inc. has a market capitalization of US$234m, and total annual CEO compensation was reported as US$956k for the year to December 2019. That's a notable increase of 11% on last year. In particular, the salary of US$545.0k, 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$100m and US$400m, we discovered that the median CEO total compensation of that group was US$941k. This suggests that First Bancorp remunerates its CEO largely in line with the industry average. Moreover, Tony McKim also holds US$2.1m worth of First Bancorp stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary US$545k US$520k 57%
Other US$411k US$338k 43%
Total CompensationUS$956k US$858k100%

Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. According to our research, First Bancorp has allocated a higher percentage of pay to salary in comparison to the wider 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:FNLC CEO Compensation July 26th 2020

A Look at The First Bancorp, Inc.'s Growth Numbers

Over the past three years, The First Bancorp, Inc. has seen its earnings per share (EPS) grow by 12% per year. In the last year, its revenue is up 8.9%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has The First Bancorp, Inc. Been A Good Investment?

Since shareholders would have lost about 9.4% over three years, some The First Bancorp, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, First Bancorp pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But on the bright side, earnings growth is positive over the same period. It's tough for us to say CEO compensation is too generous when earnings growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at First Bancorp.

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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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