Here's Why It's Unlikely That Laboratory Corporation of America Holdings' (NYSE:LH) CEO Will See A Pay Rise This Year

Key Insights

• Laboratory Corporation of America Holdings' Annual General Meeting to take place on 14th of May
• CEO Adam Schechter's total compensation includes salary of US$1.37m
• The overall pay is comparable to the industry average
• Laboratory Corporation of America Holdings' three-year loss to shareholders was 13% while its EPS was down 44% over the past three years

The results at Laboratory Corporation of America Holdings (NYSE:LH) have been quite disappointing recently and CEO Adam Schechter bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Laboratory Corporation of America Holdings

Comparing Laboratory Corporation of America Holdings' CEO Compensation With The Industry

At the time of writing, our data shows that Laboratory Corporation of America Holdings has a market capitalization of US$17b, and reported total annual CEO compensation of US$16m for the year to December 2023. That's just a smallish increase of 7.0% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.4m.

On comparing similar companies in the American Healthcare industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$17m. So it looks like Laboratory Corporation of America Holdings compensates Adam Schechter in line with the median for the industry. What's more, Adam Schechter holds US$19m 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$1.4m	US$1.3m	9%
Other	US$15m	US$14m	91%
Total Compensation	US$16m	US$15m	100%

Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. In Laboratory Corporation of America Holdings' 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.

Laboratory Corporation of America Holdings' Growth

Over the last three years, Laboratory Corporation of America Holdings has shrunk its earnings per share by 44% per year. Its revenue is up 4.6% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Laboratory Corporation of America Holdings Been A Good Investment?

Given the total shareholder loss of 13% over three years, many shareholders in Laboratory Corporation of America Holdings are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 4 warning signs for Laboratory Corporation of America Holdings that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.