Is HealthEquity, Inc.’s (NASDAQ:HQY) CEO Salary Justified?

Jon Kessler became the CEO of HealthEquity, Inc. (NASDAQ:HQY) in 2014. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for HealthEquity

How Does Jon Kessler’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that HealthEquity, Inc. has a market cap of US$6.2b, and reported total annual CEO compensation of US$4.8m for the year to January 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$483k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.4m.

That means Jon Kessler receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at HealthEquity has changed from year to year.

NasdaqGS:HQY CEO Compensation, February 24th 2020
NasdaqGS:HQY CEO Compensation, February 24th 2020

Is HealthEquity, Inc. Growing?

HealthEquity, Inc. has increased its earnings per share (EPS) by an average of 33% a year, over the last three years (using a line of best fit). Its revenue is up 50% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.

Has HealthEquity, Inc. Been A Good Investment?

I think that the total shareholder return of 100%, over three years, would leave most HealthEquity, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Jon Kessler is paid around what is normal the leaders of comparable size companies.

The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! Shareholders may want to check for free if HealthEquity insiders are buying or selling shares.

Important note: HealthEquity 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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