Why We Think National HealthCare Corporation's (NYSEMKT:NHC) CEO Compensation Is Not Excessive At All

By
Simply Wall St
Published
April 30, 2021
NYSEAM:NHC
Source: Shutterstock

The performance at National HealthCare Corporation (NYSEMKT:NHC) has been rather lacklustre of late and shareholders may be wondering what CEO Steve Flatt is planning to do about this. At the next AGM coming up on 06 May 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for National HealthCare

How Does Total Compensation For Steve Flatt Compare With Other Companies In The Industry?

According to our data, National HealthCare Corporation has a market capitalization of US$1.1b, and paid its CEO total annual compensation worth US$1.3m over the year to December 2020. That's a notable decrease of 9.8% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$476k.

In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$2.2m. That is to say, Steve Flatt is paid under the industry median. Furthermore, Steve Flatt directly owns US$3.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$476k US$495k 37%
Other US$802k US$922k 63%
Total CompensationUS$1.3m US$1.4m100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. It's interesting to note that National HealthCare 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.

ceo-compensation
AMEX:NHC CEO Compensation May 1st 2021

A Look at National HealthCare Corporation's Growth Numbers

Over the last three years, National HealthCare Corporation has shrunk its earnings per share by 9.6% per year. It saw its revenue drop 1.9% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has National HealthCare Corporation Been A Good Investment?

National HealthCare Corporation has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for National HealthCare you should be aware of, and 1 of them is concerning.

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’re looking to trade a wide range of investments, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.