First Merchants Corporation's (NASDAQ:FRME) CEO Compensation Looks Acceptable To Us And Here's Why

Key Insights

• First Merchants will host its Annual General Meeting on 16th of May
• Salary of US$762.5k is part of CEO Mark Hardwick's total remuneration
• Total compensation is 32% below industry average
• First Merchants' total shareholder return over the past three years was 8.3% while its EPS was down 2.4% over the past three years

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Shareholders may be wondering what CEO Mark Hardwick plans to do to improve the less than great performance at First Merchants Corporation (NASDAQ:FRME) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 16th of May. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for First Merchants

How Does Total Compensation For Mark Hardwick Compare With Other Companies In The Industry?

At the time of writing, our data shows that First Merchants Corporation has a market capitalization of US$2.2b, and reported total annual CEO compensation of US$2.1m for the year to December 2024. That's a notable increase of 16% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$763k.

On examining similar-sized companies in the American Banks industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.1m. In other words, First Merchants pays its CEO lower than the industry median. Furthermore, Mark Hardwick directly owns US$4.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. It's interesting to note that First Merchants allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

First Merchants Corporation's Growth

Over the last three years, First Merchants Corporation has shrunk its earnings per share by 2.4% per year. In the last year, its revenue is down 2.3%.

Its a bit disappointing to see that the company has failed to grow its EPS. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has First Merchants Corporation Been A Good Investment?

First Merchants Corporation has generated a total shareholder return of 8.3% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

Shareholders may want to check for free if First Merchants insiders are buying or selling shares.

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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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.