In 2001 Kevin McNamara was appointed CEO of Chemed Corporation (NYSE:CHE). 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Kevin McNamara’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Chemed Corporation has a market cap of US$5.0b, and is paying total annual CEO compensation of US$7.9m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.7m.
So Kevin McNamara receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Chemed has changed from year to year.
Is Chemed Corporation Growing?
Over the last three years Chemed Corporation has grown its earnings per share (EPS) by an average of 26% per year (using a line of best fit). In the last year, its revenue is up 7.0%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Chemed Corporation Been A Good Investment?
Boasting a total shareholder return of 132% over three years, Chemed Corporation has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Remuneration for Kevin McNamara is close enough to the median pay for a CEO of a similar sized company .
Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. So one could argue the CEO compensation is quite modest, if you consider company performance! So you may want to check if insiders are buying Chemed shares with their own money (free access).
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.