Here's Why Encompass Health Corporation's (NYSE:EHC) CEO May Deserve A Raise

Key Insights

• Encompass Health to hold its Annual General Meeting on 1st of May
• Total pay for CEO Mark Tarr includes US$1.05m salary
• The total compensation is 48% less than the average for the industry
• Encompass Health's total shareholder return over the past three years was 92% while its EPS grew by 14% over the past three years

Shareholders will be pleased by the impressive results for Encompass Health Corporation (NYSE:EHC) recently and CEO Mark Tarr has played a key role. At the upcoming AGM on 1st of May, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

See our latest analysis for Encompass Health

Comparing Encompass Health Corporation's CEO Compensation With The Industry

At the time of writing, our data shows that Encompass Health Corporation has a market capitalization of US$10b, and reported total annual CEO compensation of US$9.3m for the year to December 2024. That's just a smallish increase of 5.3% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

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$18m. Accordingly, Encompass Health pays its CEO under the industry median. Moreover, Mark Tarr also holds US$53m worth of Encompass Health stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. In Encompass Health's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Encompass Health Corporation's Growth

Over the past three years, Encompass Health Corporation has seen its earnings per share (EPS) grow by 14% per year. It achieved revenue growth of 12% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Encompass Health Corporation Been A Good Investment?

Boasting a total shareholder return of 92% over three years, Encompass Health Corporation has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

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 Encompass Health that you should be aware of before investing.

Important note: Encompass Health 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.

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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.