Shareholders May Be Wary Of Increasing Sound Financial Bancorp, Inc.'s (NASDAQ:SFBC) CEO Compensation Package

Key Insights

• Sound Financial Bancorp's Annual General Meeting to take place on 29th of May
• Total pay for CEO Laurie Stewart includes US$515.0k salary
• The overall pay is 59% above the industry average
• Sound Financial Bancorp's three-year loss to shareholders was 5.9% while its EPS was down 16% over the past three years

The results at Sound Financial Bancorp, Inc. (NASDAQ:SFBC) have been quite disappointing recently and CEO Laurie Stewart bears some responsibility for this. At the upcoming AGM on 29th of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Sound Financial Bancorp

Comparing Sound Financial Bancorp, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Sound Financial Bancorp, Inc. has a market capitalization of US$100m, and reported total annual CEO compensation of US$1.0m for the year to December 2023. That's a notable increase of 8.3% on last year. In particular, the salary of US$515.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the American Banks industry with market capitalizations under US$200m, the reported median total CEO compensation was US$639k. This suggests that Laurie Stewart is paid more than the median for the industry. Furthermore, Laurie Stewart directly owns US$3.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$515k	US$510k	51%
Other	US$502k	US$429k	49%
Total Compensation	US$1.0m	US$939k	100%

On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. According to our research, Sound Financial Bancorp 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.

Sound Financial Bancorp, Inc.'s Growth

Over the last three years, Sound Financial Bancorp, Inc. has shrunk its earnings per share by 16% per year. It saw its revenue drop 6.5% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Sound Financial Bancorp, Inc. Been A Good Investment?

Given the total shareholder loss of 5.9% over three years, many shareholders in Sound Financial Bancorp, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

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, the board will get the chance to explain the steps it plans to take to improve business performance.

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 Sound Financial Bancorp that you should be aware of before investing.

Switching gears from Sound Financial Bancorp, 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. 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.