Is Community Healthcare Trust Incorporated's (NYSE:CHCT) CEO Being Overpaid?

Simply Wall St

Tim Wallace has been the CEO of Community Healthcare Trust Incorporated (NYSE:CHCT) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Community Healthcare Trust

How Does Tim Wallace's Compensation Compare With Similar Sized Companies?

Our data indicates that Community Healthcare Trust Incorporated is worth US$965m, and total annual CEO compensation was reported as US$2.2m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$458k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.5m.

That means Tim Wallace receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at Community Healthcare Trust has changed from year to year.

NYSE:CHCT CEO Compensation, February 17th 2020

Is Community Healthcare Trust Incorporated Growing?

Community Healthcare Trust Incorporated has reduced its earnings per share by an average of 8.5% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 19% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Community Healthcare Trust Incorporated Been A Good Investment?

I think that the total shareholder return of 157%, over three years, would leave most Community Healthcare Trust Incorporated shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Tim Wallace is paid around the same as most CEOs of similar size companies.

We're not seeing great strides in earnings per share, but the company has clearly pleased some investors, given the returns over the last three years. So we doubt many are complaining about the fairly normal CEO pay. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Community Healthcare Trust.

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.

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