Yahoo Finance Is DaVita Inc.’s (NYSE:DVA) CEO Being Overpaid?
In 1999 Kent Thiry was appointed CEO of DaVita Inc. (NYSE:DVA). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for DaVita
How Does Kent Thiry’s Compensation Compare With Similar Sized Companies?
Our data indicates that DaVita Inc. is worth US$9.6b, and total annual CEO compensation is US$15m. (This number is for the twelve months until 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.3m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Kent Thiry is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean DaVita 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.
The graphic below shows how CEO compensation at DaVita has changed from year to year.
Is DaVita Inc. Growing?
Over the last three years DaVita Inc. has grown its earnings per share (EPS) by an average of 22% per year. It achieved revenue growth of 46% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has DaVita Inc. Been A Good Investment?
With a three year total loss of 18%, DaVita Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary…
We compared total CEO remuneration at DaVita Inc. with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. Shareholders may want to check for free if DaVita insiders are buying or selling shares.
Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
