In 2015 Theodore Wahl was appointed CEO of Healthcare Services Group, Inc. (NASDAQ:HCSG). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Theodore Wahl's Compensation Compare With Similar Sized Companies?
Our data indicates that Healthcare Services Group, Inc. is worth US$1.7b, and total annual CEO compensation was reported as US$3.9m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.5m.
So Theodore Wahl receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at Healthcare Services Group, below.
Is Healthcare Services Group, Inc. Growing?
On average over the last three years, Healthcare Services Group, Inc. has shrunk earnings per share by 3.1% each year (measured with a line of best fit). In the last year, its revenue is down 8.1%.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Healthcare Services Group, Inc. Been A Good Investment?
Since shareholders would have lost about 45% 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.
Remuneration for Theodore Wahl is close enough to the median pay for a CEO of a similar sized company .
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Few would argue that it's wise for the company to pay any more, before returns improve. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Healthcare Services Group that investors should be aware of in a dynamic business environment.
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.
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