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Is American Shared Hospital Services's (NYSEMKT:AMS) CEO Being Overpaid?

Simply Wall St

In 1983 Ernest Bates was appointed CEO of American Shared Hospital Services (NYSEMKT:AMS). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for American Shared Hospital Services

How Does Ernest Bates's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that American Shared Hospital Services has a market cap of US$14m, and reported total annual CEO compensation of US$452k for the year to December 2018. Notably, the salary of US$434k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$512k.

That means Ernest Bates receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at American Shared Hospital Services, below.

AMEX:AMS CEO Compensation, October 31st 2019

Is American Shared Hospital Services Growing?

Over the last three years American Shared Hospital Services has grown its earnings per share (EPS) by an average of 13% per year (using a line of best fit). It saw its revenue drop 2.0% over the last year.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has American Shared Hospital Services Been A Good Investment?

Given the total loss of 20% over three years, many shareholders in American Shared Hospital Services are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Ernest Bates is paid around what is normal the leaders of comparable size companies.

We like that the company is growing EPS, but we find the returns over the last three years to be lacking. Considering the the positives we don't think the CEO pays is too high, but it's certainly hard to argue it is too low. Whatever your view on compensation, you might want to check if insiders are buying or selling American Shared Hospital Services shares (free trial).

Important note: American Shared Hospital Services may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.