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David Becker has been the CEO of First Internet Bancorp (NASDAQ:INBK) since 2005. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does David Becker’s Compensation Compare With Similar Sized Companies?
According to our data, First Internet Bancorp has a market capitalization of US$198m, and pays its CEO total annual compensation worth US$1.5m. (This is based on the year to December 2018). That’s just a smallish increase of 2.2% on last year. While we always look at total compensation first, we note that the salary component is less, at US$700k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO total compensation was US$1.1m.
It would therefore appear that First Internet Bancorp pays David Becker more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at First Internet Bancorp has changed from year to year.
Is First Internet Bancorp Growing?
First Internet Bancorp has increased its earnings per share (EPS) by an average of 3.5% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 4.9%.
I’m not particularly impressed by the revenue growth, but it is good to see modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.
Has First Internet Bancorp Been A Good Investment?
Since shareholders would have lost about 15% over three years, some First Internet Bancorp shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at First Internet Bancorp with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. So you may want to check if insiders are buying First Internet Bancorp shares with their own money (free access).
If you want to buy a stock that is better than First Internet Bancorp, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.