In 2012 Paul Black was appointed CEO of Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
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 was reported as US$7.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.1m.
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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Allscripts Healthcare Solutions has changed from year to year.
Is Allscripts Healthcare Solutions, Inc. Growing?
Allscripts Healthcare Solutions, Inc. has reduced its earnings per share by an average of 8.9% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 14%.
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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Allscripts Healthcare Solutions, Inc. Been A Good Investment?
Since shareholders would have lost about 18% over three years, some Allscripts Healthcare Solutions, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Allscripts Healthcare Solutions, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Just as bad, share price gains for investors have failed to materialize, over the same period. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Allscripts Healthcare Solutions shares (free trial).
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 email@example.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.