Shareholders May Be Wary Of Increasing First Northwest Bancorp's (NASDAQ:FNWB) CEO Compensation Package

Key Insights

• First Northwest Bancorp's Annual General Meeting to take place on 30th of May
• CEO Matt Deines' total compensation includes salary of US$494.2k
• Total compensation is similar to the industry average
• First Northwest Bancorp's EPS declined by 21% over the past three years while total shareholder loss over the past three years was 34%

The results at First Northwest Bancorp (NASDAQ:FNWB) have been quite disappointing recently and CEO Matt Deines bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 30th of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for First Northwest Bancorp

How Does Total Compensation For Matt Deines Compare With Other Companies In The Industry?

According to our data, First Northwest Bancorp has a market capitalization of US$100m, and paid its CEO total annual compensation worth US$599k over the year to December 2023. We note that's a decrease of 17% compared to last year. In particular, the salary of US$494.2k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the American Banks industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$639k. From this we gather that Matt Deines is paid around the median for CEOs in the industry. Furthermore, Matt Deines directly owns US$1.2m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	US$494k	US$447k	83%
Other	US$104k	US$274k	17%
Total Compensation	US$599k	US$721k	100%

Talking in terms of the industry, salary represented approximately 45% of total compensation out of all the companies we analyzed, while other remuneration made up 55% of the pie. It's interesting to note that First Northwest Bancorp pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at First Northwest Bancorp's Growth Numbers

Over the last three years, First Northwest Bancorp has shrunk its earnings per share by 21% per year. Its revenue is down 25% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Northwest Bancorp Been A Good Investment?

With a total shareholder return of -34% over three years, First Northwest Bancorp shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for First Northwest Bancorp that investors should look into moving forward.

Important note: First Northwest Bancorp is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.