David Chernow became the CEO of Select Medical Holdings Corporation (NYSE:SEM) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does David Chernow’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Select Medical Holdings Corporation has a market cap of US$3.4b, and reported total annual CEO compensation of US$8.2m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$995k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$4.9m.
Thus we can conclude that David Chernow receives more in total compensation than the median of a group of companies in the same market, and of similar size to Select Medical Holdings Corporation. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Select Medical Holdings has changed from year to year.
Is Select Medical Holdings Corporation Growing?
Select Medical Holdings Corporation has increased its earnings per share (EPS) by an average of 14% a year, over the last three years (using a line of best fit). Its revenue is up 8.8% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Select Medical Holdings Corporation Been A Good Investment?
Most shareholders would probably be pleased with Select Medical Holdings Corporation for providing a total return of 96% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Select Medical Holdings Corporation pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Select Medical Holdings.
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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