Is PRA Health Sciences, Inc.’s (NASDAQ:PRAH) CEO Being Overpaid?

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Colin Shannon has been the CEO of PRA Health Sciences, Inc. (NASDAQ:PRAH) since 2010. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for PRA Health Sciences

How Does Colin Shannon’s Compensation Compare With Similar Sized Companies?

According to our data, PRA Health Sciences, Inc. has a market capitalization of US$5.7b, and pays its CEO total annual compensation worth US$7.9m. (This is based on the year to December 2018). We note that’s an increase of 32% above last year. While we always look at total compensation first, we note that the salary component is less, at US$930k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$7.0m.

So Colin Shannon receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at PRA Health Sciences has changed from year to year.

NasdaqGS:PRAH CEO Compensation, June 4th 2019
NasdaqGS:PRAH CEO Compensation, June 4th 2019

Is PRA Health Sciences, Inc. Growing?

On average over the last three years, PRA Health Sciences, Inc. has grown earnings per share (EPS) by 22% each year (using a line of best fit). Its revenue is up 17% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has PRA Health Sciences, Inc. Been A Good Investment?

I think that the total shareholder return of 85%, over three years, would leave most PRA Health Sciences, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

Colin Shannon is paid around the same as most CEOs of similar size companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Indeed, many might consider the pay rather modest, given the solid company performance! Shareholders may want to check for free if PRA Health Sciences insiders are buying or selling shares.

If you want to buy a stock that is better than PRA Health Sciences, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.