Stock Analysis

We Think Some Shareholders May Hesitate To Increase Tenet Healthcare Corporation's (NYSE:THC) CEO Compensation

  •  Updated
Source: Shutterstock

CEO Ron Rittenmeyer has done a decent job of delivering relatively good performance at Tenet Healthcare Corporation (NYSE:THC) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 06 May 2021. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Tenet Healthcare

How Does Total Compensation For Ron Rittenmeyer Compare With Other Companies In The Industry?

Our data indicates that Tenet Healthcare Corporation has a market capitalization of US$6.3b, and total annual CEO compensation was reported as US$17m for the year to December 2020. Notably, that's a decrease of 31% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.4m.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$7.5m. Hence, we can conclude that Ron Rittenmeyer is remunerated higher than the industry median. What's more, Ron Rittenmeyer holds US$42m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.4m US$1.2m 9%
Other US$15m US$23m 91%
Total CompensationUS$17m US$24m100%

Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. Tenet Healthcare pays a modest slice of remuneration through salary, as compared 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.

NYSE:THC CEO Compensation April 30th 2021

Tenet Healthcare Corporation's Growth

Over the past three years, Tenet Healthcare Corporation has seen its earnings per share (EPS) grow by 99% per year. Its revenue is down 3.0% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Tenet Healthcare Corporation Been A Good Investment?

Most shareholders would probably be pleased with Tenet Healthcare Corporation for providing a total return of 88% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Tenet Healthcare that investors should be aware of in a dynamic business environment.

Important note: Tenet Healthcare 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.

When trading Tenet Healthcare or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Valuation is complex, but we're helping make it simple.

Find out whether Tenet Healthcare is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis