The decent performance at First Commonwealth Financial Corporation (NYSE:FCF) recently will please most shareholders as they go into the AGM coming up on 27 April 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.
Comparing First Commonwealth Financial Corporation's CEO Compensation With the industry
According to our data, First Commonwealth Financial Corporation has a market capitalization of US$1.3b, and paid its CEO total annual compensation worth US$1.0m over the year to December 2020. We note that's a decrease of 8.7% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$488k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$2.4m. In other words, First Commonwealth Financial pays its CEO lower than the industry median. Furthermore, Mike Price directly owns US$4.1m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. According to our research, First Commonwealth Financial has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at First Commonwealth Financial Corporation's Growth Numbers
First Commonwealth Financial Corporation's earnings per share (EPS) grew 9.1% per year over the last three years. Its revenue is down 9.9% over the previous year.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Commonwealth Financial Corporation Been A Good Investment?
With a total shareholder return of 0.7% over three years, First Commonwealth Financial Corporation has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.
The company's overall performance, while not bad, could be better. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for First Commonwealth Financial that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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