Is Inovalon Holdings, Inc.'s (NASDAQ:INOV) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2014 Keith Dunleavy was appointed CEO of Inovalon Holdings, Inc. (NASDAQ:INOV). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

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See our latest analysis for Inovalon Holdings

How Does Keith Dunleavy's Compensation Compare With Similar Sized Companies?

According to our data, Inovalon Holdings, Inc. has a market capitalization of US$2.1b, and pays its CEO total annual compensation worth US$210k. (This figure is for the year to December 2018). That's a modest increase of 0.03% on the prior year year. Notably, the salary of US$205k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.0m.

A first glance this seems like a real positive for shareholders, since Keith Dunleavy is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at Inovalon Holdings, below.

NasdaqGS:INOV CEO Compensation, May 15th 2019

Is Inovalon Holdings, Inc. Growing?

Over the last three years Inovalon Holdings, Inc. has shrunk its earnings per share by an average of 97% per year (measured with a line of best fit). It achieved revenue growth of 34% over the last year.

The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Inovalon Holdings, Inc. Been A Good Investment?

With a three year total loss of 26%, Inovalon Holdings, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Inovalon Holdings, Inc. is currently paying its CEO below what is normal for companies of its size.

Keith Dunleavy is paid less than CEOs of similar size companies, but growth hasn't been particularly impressive and the total shareholder return over three years would leave many disappointed. So while shareholders shouldn't be overly concerned about CEO compensation, they would probably like to see improved shareholder returns before seeing a pay increase. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Inovalon Holdings (free visualization of insider trades).

Important note: Inovalon Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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. Thank you for reading.