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Is Healthcare Services Group, Inc. (NASDAQ:HCSG) Excessively Paying Its CEO?

Simply Wall St

Theodore Wahl became the CEO of Healthcare Services Group, Inc. (NASDAQ:HCSG) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. 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 process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Healthcare Services Group

How Does Theodore Wahl's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Healthcare Services Group, Inc. has a market cap of US$1.7b, and is paying total annual CEO compensation of US$3.9m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.

That means Theodore Wahl 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, below, how CEO compensation at Healthcare Services Group has changed over time.

NasdaqGS:HCSG CEO Compensation, September 5th 2019

Is Healthcare Services Group, Inc. Growing?

Over the last three years Healthcare Services Group, Inc. has grown its earnings per share (EPS) by an average of 5.0% per year (using a line of best fit). It saw its revenue drop -2.4% over the last year.

I would argue that the lack of revenue growth in the last year is less than ideal, but I'm happy with the EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has Healthcare Services Group, Inc. Been A Good Investment?

Since shareholders would have lost about 38% over three years, some Healthcare Services Group, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Remuneration for Theodore Wahl is close enough to the median pay for a CEO of a similar sized company .

The per share growth could be better, in our view. And we think the shareholder returns - over three years - have been underwhelming. So it would take a bold person to suggest the pay is too modest. Shareholders may want to check for free if Healthcare Services Group insiders are buying or selling shares.

Important note: Healthcare Services Group 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.