Here's Why Shareholders May Want To Be Cautious With Increasing Virgin Galactic Holdings, Inc.'s (NYSE:SPCE) CEO Pay Packet

Key Insights

• Virgin Galactic Holdings to hold its Annual General Meeting on 5th of June
• Total pay for CEO Michael Colglazier includes US$1.00m salary
• Total compensation is 572% above industry average
• Virgin Galactic Holdings' EPS grew by 25% over the past three years while total shareholder loss over the past three years was 97%

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In the past three years, the share price of Virgin Galactic Holdings, Inc. (NYSE:SPCE) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 5th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Virgin Galactic Holdings

Comparing Virgin Galactic Holdings, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Virgin Galactic Holdings, Inc. has a market capitalization of US$148m, and reported total annual CEO compensation of US$5.6m for the year to December 2024. We note that's a decrease of 27% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

In comparison with other companies in the American Aerospace & Defense industry with market capitalizations under US$200m, the reported median total CEO compensation was US$839k. This suggests that Michael Colglazier is paid more than the median for the industry. Moreover, Michael Colglazier also holds US$114k worth of Virgin Galactic Holdings stock directly under their own name.

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Although there is a difference in how total compensation is set, Virgin Galactic Holdings more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Virgin Galactic Holdings, Inc.'s Growth Numbers

Over the past three years, Virgin Galactic Holdings, Inc. has seen its earnings per share (EPS) grow by 25% per year. Its revenue is down 34% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Virgin Galactic Holdings, Inc. Been A Good Investment?

The return of -97% over three years would not have pleased Virgin Galactic Holdings, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which are potentially serious) in Virgin Galactic Holdings we think you should know about.

Important note: Virgin Galactic Holdings 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.