Is Centene Corporation (NYSE:CNC) Overpaying Its CEO?

In 1996 Michael Neidorff was appointed CEO of Centene Corporation (NYSE:CNC). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

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How Does Michael Neidorff’s Compensation Compare With Similar Sized Companies?

According to our data, Centene Corporation has a market capitalization of US$23b, and pays its CEO total annual compensation worth US$25m. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at US$1.5m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

It would therefore appear that Centene Corporation pays Michael Neidorff more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration 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 Centene has changed from year to year.

NYSE:CNC CEO Compensation January 17th 19
NYSE:CNC CEO Compensation January 17th 19

Is Centene Corporation Growing?

Over the last three years Centene Corporation has grown its earnings per share (EPS) by an average of 28% per year (using a line of best fit). In the last year, its revenue is up 17%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Centene Corporation Been A Good Investment?

Boasting a total shareholder return of 100% over three years, Centene Corporation has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Centene Corporation, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Centene (free visualization of insider trades).

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.