In 2017 Prasanth Manghat was appointed CEO of NMC Health Plc (LON:NMC). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Prasanth Manghat’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that NMC Health Plc has a market cap of UK£1.6b, and reported total annual CEO compensation of US$5.5m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, 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. 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$1.8m.
It would therefore appear that NMC Health Plc pays Prasanth Manghat more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at NMC Health has changed from year to year.
Is NMC Health Plc Growing?
NMC Health Plc has increased its earnings per share (EPS) by an average of 26% a year, over the last three years (using a line of best fit). It achieved revenue growth of 34% over the last year.
This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has NMC Health Plc Been A Good Investment?
Given the total loss of 56% over three years, many shareholders in NMC Health Plc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared the total CEO remuneration paid by NMC Health Plc, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling NMC Health 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.
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