How Does National HealthCare's (NYSEMKT:NHC) CEO Pay Compare With Company Performance?
This article will reflect on the compensation paid to Steve Flatt who has served as CEO of National HealthCare Corporation (NYSEMKT:NHC) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for National HealthCare
How Does Total Compensation For Steve Flatt Compare With Other Companies In The Industry?
According to our data, National HealthCare Corporation has a market capitalization of US$989m, and paid its CEO total annual compensation worth US$1.4m over the year to December 2019. Notably, that's an increase of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$495k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.7m. That is to say, Steve Flatt is paid under the industry median. Moreover, Steve Flatt also holds US$3.2m worth of National HealthCare 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$495k | US$393k | 35% |
Other | US$922k | US$880k | 65% |
Total Compensation | US$1.4m | US$1.3m | 100% |
Speaking on an industry level, nearly 18% of total compensation represents salary, while the remainder of 82% is other remuneration. National HealthCare is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at National HealthCare Corporation's Growth Numbers
Over the last three years, National HealthCare Corporation has shrunk its earnings per share by 17% per year. In the last year, its revenue changed by just 0.4%.
Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has National HealthCare Corporation Been A Good Investment?
National HealthCare Corporation has not done too badly by shareholders, with a total return of 6.2%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As we noted earlier, National HealthCare pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Over the last three years, shareholder returns have been unexciting, and EPS growth has fared even worse. We can't categorize CEO compensation as high, but shareholders might object to a raise at this stage, considering overall poor performance.
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 4 warning signs for National HealthCare that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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