It's Probably Less Likely That Franklin Financial Services Corporation's (NASDAQ:FRAF) CEO Will See A Huge Pay Rise This Year

In the past three years, shareholders of Franklin Financial Services Corporation (NASDAQ:FRAF) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 27 April 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Franklin Financial Services

Comparing Franklin Financial Services Corporation's CEO Compensation With the industry

According to our data, Franklin Financial Services Corporation has a market capitalization of US$132m, and paid its CEO total annual compensation worth US$574k over the year to December 2020. That's slightly lower by 4.7% over the previous year. Notably, the salary which is US$425.6k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$572k. From this we gather that Tim Henry is paid around the median for CEOs in the industry. Moreover, Tim Henry also holds US$279k worth of Franklin Financial Services stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$426k	US$368k	74%
Other	US$148k	US$234k	26%
Total Compensation	US$574k	US$602k	100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. Franklin Financial Services is paying a higher share of its remuneration through a salary in comparison to the overall 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.

Franklin Financial Services Corporation's Growth

Over the past three years, Franklin Financial Services Corporation has seen its earnings per share (EPS) grow by 80% per year. It saw its revenue drop 8.5% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Franklin Financial Services Corporation Been A Good Investment?

With a three year total loss of 7.0% for the shareholders, Franklin Financial Services Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Franklin Financial Services that investors should look into moving forward.

Switching gears from Franklin Financial Services, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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