Is HealthStream, Inc. (NASDAQ:HSTM) Overpaying Its CEO?
In 1990 Bobby Frist was appointed CEO of HealthStream, Inc. (NASDAQ:HSTM). 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for HealthStream
How Does Bobby Frist's Compensation Compare With Similar Sized Companies?
Our data indicates that HealthStream, Inc. is worth US$818m, 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 examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$3.2m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where HealthStream stands. On an industry level, roughly 18% of total compensation represents salary and 82% is other remuneration. It's interesting to note that HealthStream pays out a greater portion of remuneration through salary, in comparison to the wider industry.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at HealthStream, below.
Is HealthStream, Inc. Growing?
HealthStream, Inc. has seen earnings per share (EPS) move positively by an average of 37% a year, over the last three years (using a line of best fit). It achieved revenue growth of 9.7% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 9.5%, 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.
In Summary...
It looks like HealthStream, Inc. pays its CEO less than similar sized companies.
Since the business is growing, many would argue this suggests 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. It's good to see reasonable payment of the CEO, even while the business improves. It would be an additional positive if insiders are buying shares. Shifting gears from CEO pay for a second, we've picked out 1 warning sign for HealthStream that investors should be aware of in a dynamic business environment.
If you want to buy a stock that is better than HealthStream, this free list of high return, low debt companies is a great place to look.
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.
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