Key Insights

• Chemed will host its Annual General Meeting on 20th of May
• Total pay for CEO Kevin McNamara includes US$1.60m salary
• The total compensation is similar to the average for the industry
• Over the past three years, Chemed's EPS fell by 3.0% and over the past three years, the total shareholder return was 20%

Despite positive share price growth of 20% for Chemed Corporation (NYSE:CHE) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 20th of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

How Does Total Compensation For Kevin McNamara Compare With Other Companies In The Industry?

At the time of writing, our data shows that Chemed Corporation has a market capitalization of US$8.6b, and reported total annual CEO compensation of US$13m for the year to December 2023. We note that's an increase of 8.8% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.6m.

In comparison with other companies in the American Healthcare industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$11m. So it looks like Chemed compensates Kevin McNamara in line with the median for the industry. What's more, Kevin McNamara holds US$64m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. Chemed pays a modest slice of remuneration through salary, as compared 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.

A Look at Chemed Corporation's Growth Numbers

Over the last three years, Chemed Corporation has shrunk its earnings per share by 3.0% per year. It achieved revenue growth of 6.0% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Chemed Corporation Been A Good Investment?

Chemed Corporation has generated a total shareholder return of 20% over three years, so most shareholders would 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...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company's remuneration policies and evaluate if the board's judgement and decision-making is aligned with that of the company's shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Chemed that investors should think about before committing capital to this stock.

Switching gears from Chemed, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.