Should You Worry About TD Ameritrade Holding Corporation’s (NASDAQ:AMTD) CEO Pay Cheque?

In 2016 Tim Hockey was appointed CEO of TD Ameritrade Holding Corporation (NASDAQ:AMTD). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for TD Ameritrade Holding

How Does Tim Hockey’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that TD Ameritrade Holding Corporation has a market cap of US$24b, and is paying total annual CEO compensation of US$8.6m. (This figure is for the year to September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

That means Tim Hockey receives fairly typical remuneration for the CEO of a large company. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at TD Ameritrade Holding has changed from year to year.

NasdaqGS:AMTD CEO Compensation, August 22nd 2019
NasdaqGS:AMTD CEO Compensation, August 22nd 2019

Is TD Ameritrade Holding Corporation Growing?

Over the last three years TD Ameritrade Holding Corporation has grown its earnings per share (EPS) by an average of 33% per year (using a line of best fit). Its revenue is up 16% over last year.

This demonstrates that the company has been improving recently. A good result. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.

Has TD Ameritrade Holding Corporation Been A Good Investment?

Most shareholders would probably be pleased with TD Ameritrade Holding Corporation for providing a total return of 48% 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…

Tim Hockey is paid around what is normal the leaders of larger companies.

The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at TD Ameritrade Holding.

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.