Bruce Broussard became the CEO of Humana Inc. (NYSE:HUM) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Humana.
How Does Total Compensation For Bruce Broussard Compare With Other Companies In The Industry?
At the time of writing, our data shows that Humana Inc. has a market capitalization of US$54b, and reported total annual CEO compensation of US$17m for the year to December 2019. 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$1.3m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$15m. This suggests that Humana remunerates its CEO largely in line with the industry average. Moreover, Bruce Broussard also holds US$25m worth of Humana stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 18% of total compensation represents salary and 82% is other remuneration. In Humana'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.
Humana Inc.'s Growth
Over the past three years, Humana Inc. has seen its earnings per share (EPS) grow by 35% per year. Its revenue is up 18% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Humana Inc. Been A Good Investment?
Boasting a total shareholder return of 71% over three years, Humana Inc. 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.
As previously discussed, Bruce is compensated close to the median for companies of its size, and which belong to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Humana that investors should look into moving forward.
Important note: Humana 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. 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.
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