This article will reflect on the compensation paid to Chris Reading who has served as CEO of U.S. Physical Therapy, Inc. (NYSE:USPH) since 2004. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for U.S. Physical Therapy.
Comparing U.S. Physical Therapy, Inc.'s CEO Compensation With the industry
Our data indicates that U.S. Physical Therapy, Inc. has a market capitalization of US$1.1b, and total annual CEO compensation was reported as US$2.9m for the year to December 2019. We note that's a decrease of 14% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$769k.
On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$3.8m. So it looks like U.S. Physical Therapy compensates Chris Reading in line with the median for the industry. What's more, Chris Reading holds US$6.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. It's interesting to note that U.S. Physical Therapy pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
U.S. Physical Therapy, Inc.'s Growth
U.S. Physical Therapy, Inc. has seen its earnings per share (EPS) increase by 15% a year over the past three years. It saw its revenue drop 7.9% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 U.S. Physical Therapy, Inc. Been A Good Investment?
We think that the total shareholder return of 53%, over three years, would leave most U.S. Physical Therapy, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we touched on above, U.S. Physical Therapy, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. So one could argue that CEO compensation is quite modest, if you consider company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for U.S. Physical Therapy that you should be aware of before investing.
Important note: U.S. Physical Therapy 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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