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Bobby Frist has been the CEO of HealthStream, Inc. (NASDAQ:HSTM) since 1990. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Bobby Frist's Compensation Compare With Similar Sized Companies?
Our data indicates that HealthStream, Inc. is worth US$847m, and total annual CEO compensation was reported as US$602k for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$331k. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$2.7m.
A first glance this seems like a real positive for shareholders, since Bobby Frist is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at HealthStream has changed over time.
Is HealthStream, Inc. Growing?
HealthStream, Inc. has increased its earnings per share (EPS) by an average of 38% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 12%.
This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. It could be important to check this free visual depiction of what analysts expect for the future.
Has HealthStream, Inc. Been A Good Investment?
HealthStream, Inc. has not done too badly by shareholders, with a total return of 2.5%, over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
It looks like HealthStream, Inc. pays its CEO less than similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Bobby Frist is overcompensated. Few would complain about reasonable CEO remuneration when the business is growing earnings per share. But it would be nice if insiders were also buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at HealthStream.
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 firstname.lastname@example.org. 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.