We Discuss Why Tabula Rasa HealthCare, Inc.'s (NASDAQ:TRHC) CEO Compensation May Be Closely Reviewed

By
Simply Wall St
Published
June 04, 2021
NasdaqGM:TRHC
Source: Shutterstock

Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) has not performed well recently and CEO Calvin Knowlton will probably need to up their game. At the upcoming AGM on 11 June 2021, 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.

View our latest analysis for Tabula Rasa HealthCare

Comparing Tabula Rasa HealthCare, Inc.'s CEO Compensation With the industry

Our data indicates that Tabula Rasa HealthCare, Inc. has a market capitalization of US$1.1b, and total annual CEO compensation was reported as US$4.6m for the year to December 2020. We note that's a decrease of 10% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$497k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.6m. Hence, we can conclude that Calvin Knowlton is remunerated higher than the industry median. Furthermore, Calvin Knowlton directly owns US$37m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$497k US$561k 11%
Other US$4.1m US$4.6m 89%
Total CompensationUS$4.6m US$5.1m100%

On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Tabula Rasa HealthCare allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGM:TRHC CEO Compensation June 5th 2021

A Look at Tabula Rasa HealthCare, Inc.'s Growth Numbers

Tabula Rasa HealthCare, Inc. has reduced its earnings per share by 40% a year over the last three years. Its revenue is up 1.5% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. 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 Tabula Rasa HealthCare, Inc. Been A Good Investment?

Since shareholders would have lost about 22% over three years, some Tabula Rasa HealthCare, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for Tabula Rasa HealthCare that investors should look into moving forward.

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.

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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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.