This Is The Reason Why We Think MarketAxess Holdings Inc.'s (NASDAQ:MKTX) CEO Might Be Underpaid

By
Simply Wall St
Published
June 02, 2021
NasdaqGS:MKTX

The solid performance at MarketAxess Holdings Inc. (NASDAQ:MKTX) has been impressive and shareholders will probably be pleased to know that CEO Rick McVey has delivered. At the upcoming AGM on 09 June 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

View our latest analysis for MarketAxess Holdings

How Does Total Compensation For Rick McVey Compare With Other Companies In The Industry?

Our data indicates that MarketAxess Holdings Inc. has a market capitalization of US$17b, and total annual CEO compensation was reported as US$6.1m for the year to December 2020. That's a notable increase of 91% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$500k.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$12m. Accordingly, MarketAxess Holdings pays its CEO under the industry median. Furthermore, Rick McVey directly owns US$219m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$500k US$500k 8%
Other US$5.6m US$2.7m 92%
Total CompensationUS$6.1m US$3.2m100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. MarketAxess Holdings sets aside a smaller share of compensation for 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.

ceo-compensation
NasdaqGS:MKTX CEO Compensation June 3rd 2021

A Look at MarketAxess Holdings Inc.'s Growth Numbers

MarketAxess Holdings Inc.'s earnings per share (EPS) grew 25% per year over the last three years. Its revenue is up 29% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has MarketAxess Holdings Inc. Been A Good Investment?

Most shareholders would probably be pleased with MarketAxess Holdings Inc. for providing a total return of 121% 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.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for MarketAxess Holdings that you should be aware of before investing.

Important note: MarketAxess 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. 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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