How Should Investors Feel About Centene Corporation's (NYSE:CNC) CEO Pay?

May 30, 2019

Michael Neidorff became the CEO of Centene Corporation (NYSE:CNC) in 1996. This analysis aims first to contrast CEO compensation with other large 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. The aim of all this is to consider the appropriateness of CEO pay levels.

How Does Michael Neidorff's Compensation Compare With Similar Sized Companies?

Our data indicates that Centene Corporation is worth US$23b, and total annual CEO compensation is US$26m. (This is based on the year to December 2018). That's a modest increase of 3.4% on the prior year year. We think total compensation is more important but we note that the CEO salary is lower, at US$1.5m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Thus we can conclude that Michael Neidorff receives more in total compensation than the median of a group of large companies in the same market as Centene Corporation. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Centene has changed over time.

NYSE:CNC CEO Compensation, May 30th 2019

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Is Centene Corporation Growing?

Centene Corporation has increased its earnings per share (EPS) by an average of 24% a year, over the last three years (using a line of best fit). It achieved revenue growth of 29% over the last year.

This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Shareholders might be interested in this free visualization of analyst forecasts.

Has Centene Corporation Been A Good Investment?

Most shareholders would probably be pleased with Centene Corporation for providing a total return of 73% over three years. 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...

We compared total CEO remuneration at Centene Corporation with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Centene shares with their own money (free access).

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.

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.

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