Shareholders May Be More Conservative With Virgin Galactic Holdings, Inc.'s (NYSE:SPCE) CEO Compensation For Now

Key Insights

• Virgin Galactic Holdings will host its Annual General Meeting on 12th of June
• Salary of US$1.00m is part of CEO Michael Colglazier's total remuneration
• Total compensation is 320% above industry average
• Virgin Galactic Holdings' EPS declined by 0.9% over the past three years while total shareholder loss over the past three years was 98%

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. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 12th of June and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

See our latest analysis for Virgin Galactic Holdings

How Does Total Compensation For Michael Colglazier Compare With Other Companies In The Industry?

Our data indicates that Virgin Galactic Holdings, Inc. has a market capitalization of US$356m, and total annual CEO compensation was reported as US$7.7m for the year to December 2023. That's a notable decrease of 28% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

In comparison with other companies in the American Aerospace & Defense industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.8m. Hence, we can conclude that Michael Colglazier is remunerated higher than the industry median. Moreover, Michael Colglazier also holds US$1.0m worth of Virgin Galactic Holdings stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	13%
Other	US$6.7m	US$9.8m	87%
Total Compensation	US$7.7m	US$11m	100%

Talking in terms of the industry, salary represented approximately 24% of total compensation out of all the companies we analyzed, while other remuneration made up 76% of the pie. In Virgin Galactic Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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

Earnings per share at Virgin Galactic Holdings, Inc. are much the same as they were three years ago, albeit slightly lower. It achieved revenue growth of 252% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Virgin Galactic Holdings, Inc. Been A Good Investment?

With a total shareholder return of -98% over three years, Virgin Galactic Holdings, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Virgin Galactic Holdings (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.