Here's Why It's Unlikely That First National Corporation's (NASDAQ:FXNC) CEO Will See A Pay Rise This Year

Key Insights

• First National's Annual General Meeting to take place on 8th of May
• Total pay for CEO Scott Harvard includes US$435.9k salary
• Total compensation is similar to the industry average
• First National's three-year loss to shareholders was 12% while its EPS was down 10% over the past three years

The results at First National Corporation (NASDAQ:FXNC) have been quite disappointing recently and CEO Scott Harvard bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 8th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for First National

How Does Total Compensation For Scott Harvard Compare With Other Companies In The Industry?

At the time of writing, our data shows that First National Corporation has a market capitalization of US$93m, and reported total annual CEO compensation of US$593k for the year to December 2023. We note that's a decrease of 23% compared to last year. We note that the salary portion, which stands at US$435.9k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the American Banks industry with market capitalizations below US$200m, reported a median total CEO compensation of US$643k. So it looks like First National compensates Scott Harvard in line with the median for the industry. Furthermore, Scott Harvard directly owns US$1.0m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	US$436k	US$406k	73%
Other	US$158k	US$368k	27%
Total Compensation	US$593k	US$774k	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. According to our research, First National has allocated a higher percentage of pay to salary in comparison to the wider 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 National Corporation's Growth Numbers

Over the last three years, First National Corporation has shrunk its earnings per share by 10% per year. It saw its revenue drop 14% over the last year.

The decline in EPS is a bit concerning. 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. 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 National Corporation Been A Good Investment?

Given the total shareholder loss of 12% over three years, many shareholders in First National Corporation are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for First National that investors should look into moving forward.

Important note: First National 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.