Doug Cifu became the CEO of Virtu Financial, Inc. (NASDAQ:VIRT) in 2013, 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 Virtu Financial.
Comparing Virtu Financial, Inc.'s CEO Compensation With the industry
Our data indicates that Virtu Financial, Inc. has a market capitalization of US$4.2b, and total annual CEO compensation was reported as US$4.6m for the year to December 2019. We note that's a decrease of 48% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.8m. From this we gather that Doug Cifu is paid around the median for CEOs in the industry. Furthermore, Doug Cifu directly owns US$6.6m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. Virtu Financial pays out 22% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Virtu Financial, Inc.'s Growth Numbers
Virtu Financial, Inc.'s earnings per share (EPS) grew 90% per year over the last three years. Its revenue is up 97% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Virtu Financial, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Virtu Financial, Inc. for providing a total return of 81% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, Virtu Financial, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. Indeed, many might consider that Doug is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is concerning) in Virtu Financial we think you should know about.
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.
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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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