Yahoo Finance Is Premier, Inc.'s (NASDAQ:PINC) CEO Being Overpaid?
Susan DeVore has been the CEO of Premier, Inc. (NASDAQ:PINC) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Premier
How Does Susan DeVore's Compensation Compare With Similar Sized Companies?
According to our data, Premier, Inc. has a market capitalization of US$4.1b, and paid its CEO total annual compensation worth US$7.7m over the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.6m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. Readers will want to know that Premier pays a modest slice of remuneration through salary, as compared to the wider sector.
Thus we can conclude that Susan DeVore receives more in total compensation than the median of a group of companies in the same market, and of similar size to Premier, Inc.. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Premier has changed over time.
Is Premier, Inc. Growing?
On average over the last three years, Premier, Inc. has shrunk earnings per share by 26% each year (measured with a line of best fit). Its revenue is up 26% over last year.
Investors should note that, over three years, earnings per share are down. On the other hand, the strong revenue growth suggests the business is growing. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has Premier, Inc. Been A Good Investment?
Premier, Inc. has not done too badly by shareholders, with a total return of 3.5%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
We compared the total CEO remuneration paid by Premier, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for Premier (1 is a bit unpleasant!) that you should be aware of before investing here.
If you want to buy a stock that is better than Premier, this free list of high return, low debt companies is a great place to look.
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.
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. Thank you for reading.
