We Think Shareholders Are Less Likely To Approve A Pay Rise For CVS Health Corporation's (NYSE:CVS) CEO For Now

Key Insights

• CVS Health to hold its Annual General Meeting on 16th of May
• CEO Karen Lynch's total compensation includes salary of US$1.50m
• Total compensation is similar to the industry average
• CVS Health's EPS grew by 1.1% over the past three years while total shareholder loss over the past three years was 28%

Shareholders of CVS Health Corporation (NYSE:CVS) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 16th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for CVS Health

Comparing CVS Health Corporation's CEO Compensation With The Industry

At the time of writing, our data shows that CVS Health Corporation has a market capitalization of US$69b, and reported total annual CEO compensation of US$22m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.

In comparison with other companies in the American Healthcare industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$17m. This suggests that CVS Health remunerates its CEO largely in line with the industry average. What's more, Karen Lynch holds US$28m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.5m	US$1.5m	7%
Other	US$20m	US$20m	93%
Total Compensation	US$22m	US$21m	100%

On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. CVS Health pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at CVS Health Corporation's Growth Numbers

CVS Health Corporation has seen its earnings per share (EPS) increase by 1.1% a year over the past three years. It achieved revenue growth of 9.0% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has CVS Health Corporation Been A Good Investment?

Since shareholders would have lost about 28% over three years, some CVS Health Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is a bit concerning) in CVS Health we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.