How Should Investors React To Premier, Inc.’s (NASDAQ:PINC) CEO Pay?

Susan DeVore has been the CEO of Premier, Inc. (NASDAQ:PINC) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Premier

How Does Susan DeVore’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Premier, Inc. has a market cap of US$4.3b, and is paying total annual CEO compensation of US$6.5m. (This is based on the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at US$978k. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.0m.

Thus we can conclude that Susan DeVore receives more in total compensation than the median of a group of companies in the same market, and of similar size to Premier, Inc.. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Premier has changed from year to year.

NasdaqGS:PINC CEO Compensation, April 26th 2019
NasdaqGS:PINC CEO Compensation, April 26th 2019

Is Premier, Inc. Growing?

On average over the last three years, Premier, Inc. has shrunk earnings per share by 75% each year (measured with a line of best fit). In the last year, its revenue is up 6.2%.

Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. 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 Premier, Inc. Been A Good Investment?

Given the total loss of 2.2% over three years, many shareholders in Premier, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Premier, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Premier.

Important note: Premier may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.