A Quick Analysis On Virgin Money UK's (LON:VMUK) CEO Compensation

Simply Wall St
September 11, 2020

David Duffy became the CEO of Virgin Money UK PLC (LON:VMUK) in 2015, 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 Virgin Money UK.

View our latest analysis for Virgin Money UK

How Does Total Compensation For David Duffy Compare With Other Companies In The Industry?

At the time of writing, our data shows that Virgin Money UK PLC has a market capitalization of UK£1.3b, and reported total annual CEO compensation of UK£2.1m for the year to September 2019. That's a notable increase of 13% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£1.0m.

On comparing similar companies from the same industry with market caps ranging from UK£768m to UK£2.5b, we found that the median CEO total compensation was UK£782k. Hence, we can conclude that David Duffy is remunerated higher than the industry median. Furthermore, David Duffy directly owns UK£783k worth of shares in the company.

Component20192018Proportion (2019)
Salary UK£1.0m UK£1.0m 49%
Other UK£1.0m UK£833k 51%
Total CompensationUK£2.1m UK£1.8m100%

Talking in terms of the industry, salary represented approximately 40% of total compensation out of all the companies we analyzed, while other remuneration made up 60% of the pie. Virgin Money UK is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

LSE:VMUK CEO Compensation September 11th 2020

Virgin Money UK PLC's Growth

Over the last three years, Virgin Money UK PLC has shrunk its earnings per share by 50% per year. Its revenue is down 12% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Virgin Money UK PLC Been A Good Investment?

Since shareholders would have lost about 67% over three years, some Virgin Money UK PLC investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Virgin Money UK PLC is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Virgin Money UK that investors should be aware of in a dynamic business environment.

Switching gears from Virgin Money UK, 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. 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.
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