In 2017 Steve Flatt was appointed CEO of National HealthCare Corporation (NYSEMKT:NHC). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Steve Flatt’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that National HealthCare Corporation has a market cap of US$1.2b, and reported total annual CEO compensation of US$1.3m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$393k. 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$3.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at National HealthCare, below.
Is National HealthCare Corporation Growing?
On average over the last three years, National HealthCare Corporation has grown earnings per share (EPS) by 17% each year (using a line of best fit). In the last year, its revenue is up 1.8%.
This demonstrates that the company has been improving recently. A good result. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don’t have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has National HealthCare Corporation Been A Good Investment?
National HealthCare Corporation has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
It appears that National HealthCare Corporation remunerates its CEO below most similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. While returns over the last few years haven’t been top notch, there is nothing to suggest to us that Steve Flatt is overcompensated. Few would complain about reasonable CEO remuneration when the business is growing earnings per share. It would be an additional positive if insiders are buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at National HealthCare.
If you want to buy a stock that is better than National HealthCare, this free list of high return, low debt companies is a great place to look.
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