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A Quick Analysis On Premier's (NASDAQ:PINC) CEO Compensation

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Simply Wall St
·4 min read
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This article will reflect on the compensation paid to Susan DeVore who has served as CEO of Premier, Inc. (NASDAQ:PINC) since 2013. This analysis will also assess whether Premier pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Premier

Comparing Premier, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Premier, Inc. has a market capitalization of US$4.2b, and reported total annual CEO compensation of US$8.6m for the year to June 2020. We note that's an increase of 12% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.

On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.3m. This suggests that Susan DeVore is paid more than the median for the industry. What's more, Susan DeVore holds US$16m 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$1.1m

US$1.0m

13%

Other

US$7.5m

US$6.7m

87%

Total Compensation

US$8.6m

US$7.7m

100%

On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. It's interesting to note that Premier allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

Premier, Inc.'s Growth

Over the last three years, Premier, Inc. has shrunk its earnings per share by 63% per year. In the last year, its revenue is up 9.5%.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Premier, Inc. Been A Good Investment?

Premier, Inc. has generated a total shareholder return of 10% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

As we touched on above, Premier, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look great when you realize that the company has been suffering from negative EPS growth for the last three years. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Premier that investors should think about before committing capital to this stock.

Important note: Premier is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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 (at) simplywallst.com.