How Should Investors Feel About Allscripts Healthcare Solutions' (NASDAQ:MDRX) CEO Remuneration?

By
Simply Wall St
Published
November 27, 2020
NasdaqGS:MDRX

This article will reflect on the compensation paid to Paul Black who has served as CEO of Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX) since 2012. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Allscripts Healthcare Solutions.

View our latest analysis for Allscripts Healthcare Solutions

How Does Total Compensation For Paul Black Compare With Other Companies In The Industry?

At the time of writing, our data shows that Allscripts Healthcare Solutions, Inc. has a market capitalization of US$2.2b, and reported total annual CEO compensation of US$7.5m for the year to December 2019. We note that's a small decrease of 3.8% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.6m. Accordingly, our analysis reveals that Allscripts Healthcare Solutions, Inc. pays Paul Black north of the industry median. Furthermore, Paul Black directly owns US$18m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$1.0m US$1.0m 14%
Other US$6.5m US$6.8m 86%
Total CompensationUS$7.5m US$7.8m100%

On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. It's interesting to note that Allscripts Healthcare Solutions allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NasdaqGS:MDRX CEO Compensation November 27th 2020

Allscripts Healthcare Solutions, Inc.'s Growth

Over the last three years, Allscripts Healthcare Solutions, Inc. has shrunk its earnings per share by 1.6% per year. It saw its revenue drop 4.9% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. This is compounded by the fact revenue is actually down on last year. 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 Allscripts Healthcare Solutions, Inc. Been A Good Investment?

Since shareholders would have lost about 0.8% over three years, some Allscripts Healthcare Solutions, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Allscripts Healthcare Solutions pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Allscripts Healthcare Solutions that you should be aware of before investing.

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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