Here's Why It's Unlikely That Healthcare Services Group, Inc.'s (NASDAQ:HCSG) CEO Will See A Pay Rise This Year

Key Insights

• Healthcare Services Group's Annual General Meeting to take place on 28th of May
• Salary of US$1.01m is part of CEO Ted Wahl's total remuneration
• The total compensation is similar to the average for the industry
• Healthcare Services Group's three-year loss to shareholders was 59% while its EPS was down 25% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Healthcare Services Group, Inc. (NASDAQ:HCSG) recently. At the upcoming AGM on 28th of May, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Healthcare Services Group

Comparing Healthcare Services Group, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Healthcare Services Group, Inc. has a market capitalization of US$843m, and reported total annual CEO compensation of US$4.6m for the year to December 2023. That's just a smallish increase of 3.3% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On comparing similar companies from the American Commercial Services industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$4.7m. From this we gather that Ted Wahl is paid around the median for CEOs in the industry. What's more, Ted Wahl holds US$5.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	22%
Other	US$3.6m	US$3.4m	78%
Total Compensation	US$4.6m	US$4.4m	100%

Talking in terms of the industry, salary represented approximately 24% of total compensation out of all the companies we analyzed, while other remuneration made up 76% of the pie. Healthcare Services Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Healthcare Services Group, Inc.'s Growth Numbers

Over the last three years, Healthcare Services Group, Inc. has shrunk its earnings per share by 25% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Healthcare Services Group, Inc. Been A Good Investment?

The return of -59% over three years would not have pleased Healthcare Services Group, Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

Whatever your view on compensation, you might want to check if insiders are buying or selling Healthcare Services Group shares (free trial).

Important note: Healthcare Services Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.