Kevin McNamara has been the CEO of Chemed Corporation (NYSE:CHE) since 2001. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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.
Check out our latest analysis for Chemed
How Does Kevin McNamara's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Chemed Corporation has a market cap of US$6.1b, and reported total annual CEO compensation of US$8.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. 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$4.0b to US$12b. The median total CEO compensation was US$7.5m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Chemed stands. On a sector level, around 20% of total compensation represents salary and 80% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Chemed, in sharp contrast to the overall sector.
That means Kevin McNamara receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. You can see, below, how CEO compensation at Chemed has changed over time.
Is Chemed Corporation Growing?
Chemed Corporation has seen earnings per share (EPS) move positively by an average of 34% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 8.7%.
This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.
Has Chemed Corporation Been A Good Investment?
Boasting a total shareholder return of 106% over three years, Chemed Corporation has done well by shareholders. 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.
Kevin McNamara 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! Looking into other areas, we've picked out 1 warning sign for Chemed that investors should think about before committing capital to this stock.
Important note: Chemed 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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