Paresh Patel has been the CEO of HCI Group, Inc. (NYSE:HCI) since 2011. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Paresh Patel’s Compensation Compare With Similar Sized Companies?
According to our data, HCI Group, Inc. has a market capitalization of US$351m, and paid its CEO total annual compensation worth US$4.3m over the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$950k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.7m.
As you can see, Paresh Patel is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean HCI Group, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. It could be important to check this free visual depiction of what analysts expect for the future.
You can see a visual representation of the CEO compensation at HCI Group, below.
Is HCI Group, Inc. Growing?
Over the last three years HCI Group, Inc. has shrunk its earnings per share by an average of 22% per year (measured with a line of best fit). In the last year, its revenue is up 3.7%.
Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has HCI Group, Inc. Been A Good Investment?
Boasting a total shareholder return of 60% over three years, HCI Group, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount HCI Group, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. On the other hand, returns have been good, so the company is doing something right. Considering this, shareholders are probably not too worried about the CEO compensation. Shareholders may want to check for free if HCI Group insiders are buying or selling shares.
Important note: HCI Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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