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What Can We Learn About CME Group's (NASDAQ:CME) CEO Compensation?
Terry Duffy became the CEO of CME Group Inc. (NASDAQ:CME) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for CME Group.
View our latest analysis for CME Group
Comparing CME Group Inc.'s CEO Compensation With the industry
According to our data, CME Group Inc. has a market capitalization of US$60b, and paid its CEO total annual compensation worth US$12m over the year to December 2019. We note that's a decrease of 12% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.5m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$12m. This suggests that CME Group remunerates its CEO largely in line with the industry average. Furthermore, Terry Duffy directly owns US$11m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$1.5m | US$1.5m | 13% |
| Other | US$10m | US$12m | 87% |
| Total Compensation | US$12m | US$13m | 100% |
On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. Our data reveals that CME Group allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at CME Group Inc.'s Growth Numbers
Over the past three years, CME Group Inc. has seen its earnings per share (EPS) grow by 13% per year. Its revenue is up 19% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 CME Group Inc. Been A Good Investment?
Most shareholders would probably be pleased with CME Group Inc. for providing a total return of 50% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
As we noted earlier, CME Group pays its CEO in line with similar-sized companies belonging to the same industry. The company is growing earnings per share and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
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 2 warning signs for CME Group that you should be aware of before investing.
Important note: CME Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
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About NasdaqGS:CME
CME Group
Operates contract markets for the trading of futures and options on futures contracts worldwide.
Excellent balance sheet with proven track record and pays a dividend.
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Quite a lot of speculation presented as if it were evidence.You are combining alleged payment disputes, alleged bank actions, legal disputes with journalists and other unverified claims to imply that TPG’s financial reporting is somehow unreliable or that the company is approaching insolvency. That’s a very serious conclusion, but the evidence you’ve presented doesn’t establish it.TPG’s financial statements, share count, debt, cash flow and acquisitions can all be checked against official filings and corporate documents. That’s called due diligence. Repeating allegations and then pointing to a low P/E doesn’t prove anything.In fact, the P/E below 1 is precisely the reason the underlying numbers need to be investigated rather than dismissed. If you have documentary evidence that TPG’s reported figures are false, that banks actually cancelled the alleged facilities, or that the company is insolvent, publish the documents and numbers.Otherwise, this reads less like analysis and more like an attempt to create fear and selling pressure around a micro-cap stock.Claims require evidence. Allegations are not evidence.
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