Is U.S. Physical Therapy, Inc.’s (NYSE:USPH) CEO Pay Justified?

In 2004 Chris Reading was appointed CEO of U.S. Physical Therapy, Inc. (NYSE:USPH). First, this article will compare CEO compensation with compensation at similar sized companies. 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.

See our latest analysis for U.S. Physical Therapy

How Does Chris Reading’s Compensation Compare With Similar Sized Companies?

According to our data, U.S. Physical Therapy, Inc. has a market capitalization of US$1.7b, and paid its CEO total annual compensation worth US$3.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$739k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.

So Chris Reading receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance. It could be important to check this free visual depiction of what analysts expect for the future.

You can see a visual representation of the CEO compensation at U.S. Physical Therapy, below.

NYSE:USPH CEO Compensation, October 10th 2019
NYSE:USPH CEO Compensation, October 10th 2019

Is U.S. Physical Therapy, Inc. Growing?

On average over the last three years, U.S. Physical Therapy, Inc. has shrunk earnings per share by 2.4% each year (measured with a line of best fit). It achieved revenue growth of 8.5% over the last year.

The lack of earnings per share growth in the last three years is unimpressive. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.

Has U.S. Physical Therapy, Inc. Been A Good Investment?

Most shareholders would probably be pleased with U.S. Physical Therapy, Inc. for providing a total return of 113% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

Chris Reading is paid around what is normal the leaders of comparable size companies.

We’re not seeing great strides in earnings per share, but the company has clearly pleased some investors, given the returns over the last three years. So we think most shareholders wouldn’t be too worried about CEO compensation, which is close to the median for similar sized companies. Whatever your view on compensation, you might want to check if insiders are buying or selling U.S. Physical Therapy shares (free trial).

If you want to buy a stock that is better than U.S. Physical Therapy, this free list of high return, low debt companies is a great place to look.

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 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. Thank you for reading.