In 1986, Alan Miller was appointed CEO of Universal Health Realty Income Trust (NYSE:UHT). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
How Does Alan Miller’s Compensation Compare With Similar Sized Companies?
Our data indicates that Universal Health Realty Income Trust is worth US$1.4b, and total annual CEO compensation was reported as US$273k for the year to December 2019. Notably, that’s an increase of 34% over the year before. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.9m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 15% of total compensation out of all the companies we analysed, while other remuneration made up 85% of the pie. Speaking on a company level, Universal Health Realty Income Trust does not pay a salary to Alan Miller, preferring to remunerate the executive through non-salary compensation.
At first glance this seems like a real positive for shareholders, since Alan Miller is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion. You can see, below, how CEO compensation at Universal Health Realty Income Trust has changed over time.
Is Universal Health Realty Income Trust Growing?
Universal Health Realty Income Trust has reduced its earnings per share by an average of 37% a year, over the last three years (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Although we don’t have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Universal Health Realty Income Trust Been A Good Investment?
I think that the total shareholder return of 55%, over three years, would leave most Universal Health Realty Income Trust 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.
It appears that Universal Health Realty Income Trust remunerates its CEO below most similar sized companies.
Alan Miller receives relatively low remuneration compared to similar sized companies. And while the company isn’t growing earnings per share, total returns have been pleasing. Although we could see higher EPS growth, we’d argue the remuneration is not an issue, based on these observations. CEO compensation is an important area to keep your eyes on, but we’ve also identified 3 warning signs for Universal Health Realty Income Trust (2 are a bit concerning!) that you should be aware of before investing here.
If you want to buy a stock that is better than Universal Health Realty Income Trust, this free list of high return, low debt companies is a great place to look.
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