Yahoo Finance Here's Why Shareholders Should Examine Community Health Systems, Inc.'s (NYSE:CYH) CEO Compensation Package More Closely
Key Insights
Community Health Systems will host its Annual General Meeting on 7th of May
Total pay for CEO Tim Hingtgen includes US$1.29m salary
Total compensation is 185% above industry average
Community Health Systems' EPS declined by 72% over the past three years while total shareholder loss over the past three years was 74%
Community Health Systems, Inc. (NYSE:CYH) has not performed well recently and CEO Tim Hingtgen will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 7th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.
See our latest analysis for Community Health Systems
Comparing Community Health Systems, Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that Community Health Systems, Inc. has a market capitalization of US$437m, and reported total annual CEO compensation of US$8.3m for the year to December 2023. That's a notable increase of 32% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.
For comparison, other companies in the American Healthcare industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$2.9m. This suggests that Tim Hingtgen is paid more than the median for the industry. Moreover, Tim Hingtgen also holds US$4.1m worth of Community Health Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.3m | US$1.3m | 15% |
Other | US$7.1m | US$5.1m | 85% |
Total Compensation | US$8.3m | US$6.3m | 100% |
On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. In Community Health Systems' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Community Health Systems, Inc.'s Growth
Over the last three years, Community Health Systems, Inc. has shrunk its earnings per share by 72% per year. It achieved revenue growth of 2.6% over the last year.
The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Community Health Systems, Inc. Been A Good Investment?
The return of -74% over three years would not have pleased Community Health Systems, Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Community Health Systems you should be aware of, and 1 of them is concerning.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
