It's Unlikely That The CEO Of First US Bancshares, Inc. (NASDAQ:FUSB) Will See A Huge Pay Rise This Year

In the past three years, shareholders of First US Bancshares, Inc. (NASDAQ:FUSB) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29 April 2021. 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.

View our latest analysis for First US Bancshares

How Does Total Compensation For Jim House Compare With Other Companies In The Industry?

According to our data, First US Bancshares, Inc. has a market capitalization of US$62m, and paid its CEO total annual compensation worth US$482k over the year to December 2020. Notably, that's a decrease of 11% over the year before. In particular, the salary of US$345.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$573k. From this we gather that Jim House is paid around the median for CEOs in the industry. Moreover, Jim House also holds US$589k worth of First US Bancshares stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$345k	US$345k	72%
Other	US$137k	US$197k	28%
Total Compensation	US$482k	US$542k	100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that First US Bancshares pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at First US Bancshares, Inc.'s Growth Numbers

Over the past three years, First US Bancshares, Inc. has seen its earnings per share (EPS) grow by 60% per year. Its revenue is down 4.6% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has First US Bancshares, Inc. Been A Good Investment?

Since shareholders would have lost about 7.3% over three years, some First US Bancshares, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for First US Bancshares that investors should think about before committing capital to this stock.

Important note: First US Bancshares 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. 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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