Yahoo Finance Does Universal Health Services, Inc.'s (NYSE:UHS) CEO Salary Reflect Performance?
Alan Miller became the CEO of Universal Health Services, Inc. (NYSE:UHS) in 1978. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. 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.
Check out our latest analysis for Universal Health Services
How Does Alan Miller's Compensation Compare With Similar Sized Companies?
According to our data, Universal Health Services, Inc. has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$24m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.7m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that Universal Health Services, Inc. pays Alan Miller more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Universal Health Services has changed from year to year.
Is Universal Health Services, Inc. Growing?
On average over the last three years, Universal Health Services, Inc. has grown earnings per share (EPS) by 6.7% each year (using a line of best fit). In the last year, its revenue is up 5.4%.
I would argue that the improvement in revenue isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.
Has Universal Health Services, Inc. Been A Good Investment?
With a total shareholder return of 18% over three years, Universal Health Services, Inc. shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
We compared total CEO remuneration at Universal Health Services, Inc. with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. Considering this, we wouldn't want to see any big pay rises, although we'd stop short of calling the CEO compensation unfair. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Universal Health Services (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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