Stock Analysis

Community Health Systems, Inc.'s (NYSE:CYH) CEO Might Not Expect Shareholders To Be So Generous This Year

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Key Insights

  • Community Health Systems will host its Annual General Meeting on 7th of May
  • Salary of US$1.29m is part of CEO Tim Hingtgen's total remuneration
  • The overall pay is 185% above the industry average
  • Community Health Systems' three-year loss to shareholders was 74% while its EPS was down 72% over the past three years

The results at Community Health Systems, Inc. (NYSE:CYH) have been quite disappointing recently and CEO Tim Hingtgen bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 7th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Community Health Systems

How Does Total Compensation For Tim Hingtgen Compare With Other Companies In The Industry?

Our data indicates that Community Health Systems, Inc. has a market capitalization of US$437m, and total annual CEO compensation was reported as US$8.3m for the year to December 2023. That's a notable increase of 32% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

In comparison with other companies in the American Healthcare industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$2.9m. This suggests that Tim Hingtgen is paid more than the median for the industry. Moreover, Tim Hingtgen also holds US$4.1m worth of Community Health Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20232022Proportion (2023)
Salary US$1.3m US$1.3m 15%
Other US$7.1m US$5.1m 85%
Total CompensationUS$8.3m US$6.3m100%

Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. Community Health Systems sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NYSE:CYH CEO Compensation May 1st 2024

Community Health Systems, Inc.'s Growth

Over the last three years, Community Health Systems, Inc. has shrunk its earnings per share by 72% per year. It achieved revenue growth of 2.6% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Community Health Systems, Inc. Been A Good Investment?

With a total shareholder return of -74% over three years, Community Health Systems, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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.

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. That's why we did our research, and identified 3 warning signs for Community Health Systems (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Community Health Systems is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Valuation is complex, but we're helping make it simple.

Find out whether Community Health Systems is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.