In 2014 David Chernow was appointed CEO of Select Medical Holdings Corporation (NYSE:SEM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
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$1.9b, and is paying total annual CEO compensation of US$8.2m. (This figure is for the year to December 2018). That’s a notable increase of 10% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$995k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.6m.
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.
You can see a visual representation of the CEO compensation at Select Medical Holdings, below.
Is Select Medical Holdings Corporation Growing?
Select Medical Holdings Corporation has increased its earnings per share (EPS) by an average of 13% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 16%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.
Has Select Medical Holdings Corporation Been A Good Investment?
Select Medical Holdings Corporation has not done too badly by shareholders, with a total return of 3.5%, over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same 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.
Importantly, though, the company has impressed with its earnings per share growth, over three years. We also think investors are doing ok, over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.