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Is Genesis Healthcare, Inc. (NYSE:GEN) Overpaying Its CEO?

Simply Wall St

George Hager has been the CEO of Genesis Healthcare, Inc. (NYSE:GEN) since 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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 Genesis Healthcare

How Does George Hager's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Genesis Healthcare, Inc. has a market cap of US$194m, and reported total annual CEO compensation of US$2.2m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$900k. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.2m.

It would therefore appear that Genesis Healthcare, Inc. pays George Hager more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Genesis Healthcare, below.

NYSE:GEN CEO Compensation, October 7th 2019

Is Genesis Healthcare, Inc. Growing?

On average over the last three years, Genesis Healthcare, Inc. has grown earnings per share (EPS) by 3.0% each year (using a line of best fit). In the last year, its revenue is down 9.7%.

I would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.

Has Genesis Healthcare, Inc. Been A Good Investment?

Given the total loss of 56% over three years, many shareholders in Genesis Healthcare, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Genesis Healthcare, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Genesis Healthcare.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.