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Keith Dunleavy became the CEO of Inovalon Holdings, Inc. (NASDAQ:INOV) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.
How Does Keith Dunleavy’s Compensation Compare With Similar Sized Companies?
According to our data, Inovalon Holdings, Inc. has a market capitalization of US$2.1b, and pays its CEO total annual compensation worth US$210k. (This is based on the year to 2017). Notably, the salary of US$205k is the vast majority of the CEO compensation. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO compensation of that group was US$3.5m.
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, below, how CEO compensation at Inovalon Holdings has changed over time.
Is Inovalon Holdings, Inc. Growing?
On average over the last three years, Inovalon Holdings, Inc. has shrunk earnings per share by 71% each year (measured with a line of best fit). In the last year, its revenue is up 17%.
Sadly for shareholders, earnings per share are actually down, over three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Inovalon Holdings, Inc. Been A Good Investment?
Given the total loss of 25% over three years, many shareholders in Inovalon Holdings, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
It looks like Inovalon Holdings, Inc. pays its CEO less than similar sized companies.
Shareholders should note that compensation for Keith Dunleavy is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Inovalon Holdings (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.