Yahoo Finance Here's What We Think About First Foundation's (NASDAQ:FFWM) CEO Pay
Scott Farris Kavanaugh became the CEO of First Foundation Inc. (NASDAQ:FFWM) in 2009, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 Foundation
How Does Total Compensation For Scott Farris Kavanaugh Compare With Other Companies In The Industry?
Our data indicates that First Foundation Inc. has a market capitalization of US$704m, and total annual CEO compensation was reported as US$2.0m for the year to December 2019. We note that's an increase of 24% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$856k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$1.9m. This suggests that First Foundation remunerates its CEO largely in line with the industry average. Moreover, Scott Farris Kavanaugh also holds US$19m worth of First Foundation stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$856k | US$706k | 43% |
Other | US$1.1m | US$887k | 57% |
Total Compensation | US$2.0m | US$1.6m | 100% |
On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. There isn't a significant difference between First Foundation and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at First Foundation Inc.'s Growth Numbers
First Foundation Inc.'s earnings per share (EPS) grew 14% per year over the last three years. It achieved revenue growth of 7.0% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Foundation Inc. Been A Good Investment?
Given the total shareholder loss of 14% over three years, many shareholders in First Foundation Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As previously discussed, Scott Farris is compensated close to the median for companies of its size, and which belong to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. But EPS growth is moving in a favorable direction, certainly a positive sign. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for First Foundation that investors should think about before committing capital to this stock.
Important note: First Foundation 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.
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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