Here's Why Chemed Corporation's (NYSE:CHE) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Chemed will host its Annual General Meeting on 20th of May
• CEO Kevin McNamara's total compensation includes salary of US$1.60m
• The overall pay is comparable to the industry average
• Over the past three years, Chemed's EPS fell by 3.0% and over the past three years, the total shareholder return was 20%

Despite Chemed Corporation's (NYSE:CHE) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 20th of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Chemed

How Does Total Compensation For Kevin McNamara Compare With Other Companies In The Industry?

According to our data, Chemed Corporation has a market capitalization of US$8.6b, and paid its CEO total annual compensation worth US$13m over the year to December 2023. That's a notable increase of 8.8% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.6m.

For comparison, other companies in the American Healthcare industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$11m. So it looks like Chemed compensates Kevin McNamara in line with the median for the industry. Moreover, Kevin McNamara also holds US$64m worth of Chemed 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$1.6m	US$1.5m	13%
Other	US$11m	US$10m	87%
Total Compensation	US$13m	US$12m	100%

On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. Chemed sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Chemed Corporation's Growth

Over the last three years, Chemed Corporation has shrunk its earnings per share by 3.0% per year. In the last year, its revenue is up 6.0%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Chemed Corporation Been A Good Investment?

Chemed Corporation has generated a total shareholder return of 20% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

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 1 warning sign for Chemed that you should be aware of before investing.

Switching gears from Chemed, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.