What We Learned About National HealthCare's (NYSEMKT:NHC) CEO Pay

Steve Flatt has been the CEO of National HealthCare Corporation (NYSEMKT:NHC) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether National HealthCare pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for National HealthCare

Comparing National HealthCare Corporation's CEO Compensation With the industry

According to our data, National HealthCare Corporation has a market capitalization of US$1.0b, and paid its CEO total annual compensation worth US$1.4m over the year to December 2019. We note that's an increase of 11% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$495k.

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$2.5m. In other words, National HealthCare pays its CEO lower than the industry median. What's more, Steve Flatt holds US$3.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that National HealthCare pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at National HealthCare Corporation's Growth Numbers

National HealthCare Corporation has reduced its earnings per share by 17% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has National HealthCare Corporation Been A Good Investment?

With a total shareholder return of 17% over three years, National HealthCare Corporation shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As we touched on above, National HealthCare Corporation is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Shareholder returns have been uninspiring, but EPS growth has arguably been worse, over the last three years. We can't categorize CEO compensation as high, but shareholders might object to a raise at this stage, considering overall poor performance.

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 4 warning signs for National HealthCare that investors should think about before committing capital to this stock.

Important note: National 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.

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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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