This Is The Reason Why We Think Inovalon Holdings, Inc.'s (NASDAQ:INOV) CEO Deserves A Bump Up To Their Compensation

Simply Wall St
May 26, 2021

Shareholders will be pleased by the impressive results for Inovalon Holdings, Inc. (NASDAQ:INOV) recently and CEO Keith Dunleavy has played a key role. At the upcoming AGM on 02 June 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

See our latest analysis for Inovalon Holdings

How Does Total Compensation For Keith Dunleavy Compare With Other Companies In The Industry?

At the time of writing, our data shows that Inovalon Holdings, Inc. has a market capitalization of US$4.7b, and reported total annual CEO compensation of US$212k for the year to December 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is US$205.0k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$7.0m. In other words, Inovalon Holdings pays its CEO lower than the industry median. What's more, Keith Dunleavy holds US$20m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$205k US$205k 97%
Other US$6.8k US$5.6k 3%
Total CompensationUS$212k US$211k100%

On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. Inovalon Holdings has gone down a largely traditional route, paying Keith Dunleavy a high salary, giving it preference over non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

NasdaqGS:INOV CEO Compensation May 27th 2021

Inovalon Holdings, Inc.'s Growth

Inovalon Holdings, Inc.'s earnings per share (EPS) grew 30% per year over the last three years. Its revenue is up 6.1% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Inovalon Holdings, Inc. Been A Good Investment?

We think that the total shareholder return of 192%, over three years, would leave most Inovalon Holdings, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Keith receives almost all of their compensation through a salary. The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Inovalon Holdings that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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. 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.
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