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Is CME Group Inc. (NASDAQ:CME) Overpaying Its CEO?

Simply Wall St

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Terry Duffy has been the CEO of CME Group Inc. (NASDAQ:CME) since 2016. This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for CME Group

How Does Terry Duffy's Compensation Compare With Similar Sized Companies?

According to our data, CME Group Inc. has a market capitalization of US$69b, and pays its CEO total annual compensation worth US$13m. (This figure is for the year to December 2018). That's a notable increase of 10% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$1.5m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Terry Duffy receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at CME Group has changed over time.

NasdaqGS:CME CEO Compensation, June 30th 2019

Is CME Group Inc. Growing?

Over the last three years CME Group Inc. has grown its earnings per share (EPS) by an average of 32% per year (using a line of best fit). In the last year, its revenue is up 15%.

This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has CME Group Inc. Been A Good Investment?

Boasting a total shareholder return of 126% over three years, CME Group Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Terry Duffy is paid around what is normal the leaders of larger companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. So one could argue the CEO compensation is quite modest, if you consider company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling CME Group shares (free trial).

If you want to buy a stock that is better than CME Group, this free list of high return, low debt companies is a great place to look.

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.