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Here's What We Learned About The CEO Pay At HealthEquity, Inc. (NASDAQ:HQY)

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Simply Wall St
·4 min read
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Jon Kessler became the CEO of HealthEquity, Inc. (NASDAQ:HQY) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 HealthEquity

How Does Total Compensation For Jon Kessler Compare With Other Companies In The Industry?

At the time of writing, our data shows that HealthEquity, Inc. has a market capitalization of US$5.7b, and reported total annual CEO compensation of US$5.3m for the year to January 2020. That's a notable increase of 9.5% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$500k.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.6m. This suggests that Jon Kessler is paid below the industry median. What's more, Jon Kessler holds US$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$500k

US$483k

9%

Other

US$4.8m

US$4.3m

91%

Total Compensation

US$5.3m

US$4.8m

100%

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. It's interesting to note that HealthEquity allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at HealthEquity, Inc.'s Growth Numbers

HealthEquity, Inc. has reduced its earnings per share by 24% a year over the last three years. It achieved revenue growth of 126% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has HealthEquity, Inc. Been A Good Investment?

Boasting a total shareholder return of 53% over three years, HealthEquity, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we touched on above, HealthEquity, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, shareholder returns and revenues are growing at a good clip. On the flip side, EPS growth during the same period is negative. However, considering all aspects of performance, we've concluded Jon earns an appropriate compensation.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for HealthEquity (1 is concerning!) that you should be aware of before investing here.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.