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In 2014 David Chernow was appointed CEO of Select Medical Holdings Corporation (NYSE:SEM). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does David Chernow's Compensation Compare With Similar Sized Companies?
According to our data, Select Medical Holdings Corporation has a market capitalization of US$2.0b, and pays its CEO total annual compensation worth US$8.2m. (This is based on the year to December 2018). Notably, that's an increase of 10% over the year before. While we always look at total compensation first, we note that the salary component is less, at US$995k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$3.6m.
As you can see, David Chernow is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Select Medical Holdings Corporation is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Select Medical Holdings, below.
Is Select Medical Holdings Corporation Growing?
Select Medical Holdings Corporation has increased its earnings per share (EPS) by an average of 13% a year, over the last three years (using a line of best fit). Its revenue is up 16% over 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 decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Select Medical Holdings Corporation Been A Good Investment?
With a total shareholder return of 21% over three years, Select Medical Holdings Corporation shareholders would, in general, be reasonably content. 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.
We examined the amount Select Medical Holdings Corporation pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. Whatever your view on compensation, you might want to check if insiders are buying or selling Select Medical Holdings shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.