We Think Some Shareholders May Hesitate To Increase eHealth, Inc.'s (NASDAQ:EHTH) CEO Compensation

Key Insights

• eHealth's Annual General Meeting to take place on 12th of June
• Salary of US$750.0k is part of CEO Fran Soistman's total remuneration
• Total compensation is 144% above industry average
• eHealth's three-year loss to shareholders was 92% while its EPS was down 24% over the past three years

In the past three years, the share price of eHealth, Inc. (NASDAQ:EHTH) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 12th of June, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for eHealth

How Does Total Compensation For Fran Soistman Compare With Other Companies In The Industry?

At the time of writing, our data shows that eHealth, Inc. has a market capitalization of US$156m, and reported total annual CEO compensation of US$5.0m for the year to December 2023. We note that's a decrease of 20% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$750k.

On comparing similar companies from the American Insurance industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$2.1m. This suggests that Fran Soistman is paid more than the median for the industry. Moreover, Fran Soistman also holds US$2.4m worth of eHealth stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$750k	US$750k	15%
Other	US$4.2m	US$5.5m	85%
Total Compensation	US$5.0m	US$6.2m	100%

On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. eHealth is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at eHealth, Inc.'s Growth Numbers

Over the last three years, eHealth, Inc. has shrunk its earnings per share by 24% per year. It achieved revenue growth of 26% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 eHealth, Inc. Been A Good Investment?

The return of -92% over three years would not have pleased eHealth, Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for eHealth that investors should look into moving forward.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.