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Is Allscripts Healthcare Solutions, Inc.’s (NASDAQ:MDRX) CEO Pay Justified?

Simply Wall St

Paul Black has been the CEO of Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Allscripts Healthcare Solutions

How Does Paul Black’s Compensation Compare With Similar Sized Companies?

Our data indicates that Allscripts Healthcare Solutions, Inc. is worth US$1.8b, and total annual CEO compensation is US$7.7m. (This is based on the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.0m. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO compensation was US$3.5m.

As you can see, Paul Black is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Allscripts Healthcare Solutions, Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Allscripts Healthcare Solutions has changed from year to year.

NasdaqGS:MDRX CEO Compensation, March 7th 2019

Is Allscripts Healthcare Solutions, Inc. Growing?

Allscripts Healthcare Solutions, Inc. has reduced its earnings per share by an average of 39% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 17%.

Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Allscripts Healthcare Solutions, Inc. Been A Good Investment?

With a three year total loss of 20%, Allscripts Healthcare Solutions, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared the total CEO remuneration paid by Allscripts Healthcare Solutions, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Allscripts Healthcare Solutions (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.