What Does First Financial's (NASDAQ:THFF) CEO Pay Reveal?

This article will reflect on the compensation paid to Norm Lowery who has served as CEO of First Financial Corporation (NASDAQ:THFF) since 2004. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for First Financial

Comparing First Financial Corporation's CEO Compensation With the industry

At the time of writing, our data shows that First Financial Corporation has a market capitalization of US$524m, and reported total annual CEO compensation of US$3.0m for the year to December 2019. We note that's an increase of 54% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$687k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$1.1m. This suggests that Norm Lowery is paid more than the median for the industry. Furthermore, Norm Lowery directly owns US$4.0m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. First Financial pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

First Financial Corporation's Growth

Over the past three years, First Financial Corporation has seen its earnings per share (EPS) grow by 10% per year. Its revenue is up 17% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has First Financial Corporation Been A Good Investment?

Given the total shareholder loss of 10% over three years, many shareholders in First Financial Corporation are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, First Financial Corporation is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Norm is underpaid, in fact compensation is definitely on the higher side.

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 1 warning sign for First Financial that investors should think about before committing capital to this stock.

Important note: First Financial 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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