Is Franklin Financial Services Corporation’s (NASDAQ:FRAF) CEO Being Overpaid?

Tim Henry became the CEO of Franklin Financial Services Corporation (NASDAQ:FRAF) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Franklin Financial Services

How Does Tim Henry’s Compensation Compare With Similar Sized Companies?

According to our data, Franklin Financial Services Corporation has a market capitalization of US$153m, and paid its CEO total annual compensation worth US$374k over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$318k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO total compensation was US$1.2m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business. Although we don’t have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

You can see, below, how CEO compensation at Franklin Financial Services has changed over time.

NasdaqCM:FRAF CEO Compensation, October 19th 2019
NasdaqCM:FRAF CEO Compensation, October 19th 2019

Is Franklin Financial Services Corporation Growing?

Franklin Financial Services Corporation has reduced its earnings per share by an average of 21% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 30%.

The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching.

Has Franklin Financial Services Corporation Been A Good Investment?

Boasting a total shareholder return of 56% over three years, Franklin Financial Services Corporation has done well by shareholders. 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.

In Summary…

It looks like Franklin Financial Services Corporation pays its CEO less than similar sized companies.

It’s well worth noting that while Tim Henry is paid below what is normal at companies of similar size, the returns have been very pleasing, over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. So you may want to check if insiders are buying Franklin Financial Services shares with their own money (free access).

If you want to buy a stock that is better than Franklin Financial Services, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.