Shareholders Will Probably Hold Off On Increasing Sound Financial Bancorp, Inc.'s (NASDAQ:SFBC) CEO Compensation For The Time Being

By
Simply Wall St
Published
May 21, 2021
NasdaqCM:SFBC
Source: Shutterstock

Under the guidance of CEO Laurie Stewart, Sound Financial Bancorp, Inc. (NASDAQ:SFBC) has performed reasonably well recently. As shareholders go into the upcoming AGM on 27 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Sound Financial Bancorp

How Does Total Compensation For Laurie Stewart Compare With Other Companies In The Industry?

At the time of writing, our data shows that Sound Financial Bancorp, Inc. has a market capitalization of US$110m, and reported total annual CEO compensation of US$826k for the year to December 2020. That's a notable increase of 29% on last year. Notably, the salary which is US$456.3k, represents a considerable chunk of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$572k. Hence, we can conclude that Laurie Stewart is remunerated higher than the industry median. What's more, Laurie Stewart holds US$3.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$456k US$413k 55%
Other US$369k US$226k 45%
Total CompensationUS$826k US$639k100%

On an industry level, around 43% of total compensation represents salary and 57% is other remuneration. It's interesting to note that Sound Financial Bancorp pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
NasdaqCM:SFBC CEO Compensation May 21st 2021

A Look at Sound Financial Bancorp, Inc.'s Growth Numbers

Sound Financial Bancorp, Inc.'s earnings per share (EPS) grew 24% per year over the last three years. In the last year, its revenue is up 20%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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?

With a total shareholder return of 17% over three years, Sound Financial Bancorp, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Sound Financial Bancorp that you should be aware of before investing.

Important note: Sound Financial Bancorp 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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