We Discuss Why Premier, Inc.'s (NASDAQ:PINC) CEO Compensation May Be Closely Reviewed

Key Insights

• Premier will host its Annual General Meeting on 1st of December
• Salary of US$1.07m is part of CEO Mike Alkire's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, Premier's EPS fell by 16% and over the past three years, the total loss to shareholders 37%

Premier, Inc. (NASDAQ:PINC) has not performed well recently and CEO Mike Alkire will probably need to up their game. At the upcoming AGM on 1st of December, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Premier

Comparing Premier, Inc.'s CEO Compensation With The Industry

Our data indicates that Premier, Inc. has a market capitalization of US$2.5b, and total annual CEO compensation was reported as US$7.8m for the year to June 2023. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.

On comparing similar companies from the American Healthcare industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.3m. So it looks like Premier compensates Mike Alkire in line with the median for the industry. Moreover, Mike Alkire also holds US$4.9m worth of Premier stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.1m	US$1.0m	14%
Other	US$6.7m	US$6.8m	86%
Total Compensation	US$7.8m	US$7.9m	100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Premier sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Premier, Inc.'s Growth

Over the last three years, Premier, Inc. has shrunk its earnings per share by 16% per year. In the last year, its revenue is down 2.9%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Premier, Inc. Been A Good Investment?

With a total shareholder return of -37% over three years, Premier, Inc. shareholders would by and large be disappointed. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Premier that investors should think about before committing capital to this stock.

Important note: Premier 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.