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Does BGC Partners, Inc.'s (NASDAQ:BGCP) CEO Pay Reflect Performance?

Simply Wall St

In 1999 Howard Lutnick was appointed CEO of BGC Partners, Inc. (NASDAQ:BGCP). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for BGC Partners

How Does Howard Lutnick's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that BGC Partners, Inc. has a market cap of US$2.2b, and reported total annual CEO compensation of US$30m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.9m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.1m.

Thus we can conclude that Howard Lutnick receives more in total compensation than the median of a group of companies in the same market, and of similar size to BGC Partners, Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at BGC Partners has changed over time.

NasdaqGS:BGCP CEO Compensation, October 17th 2019
NasdaqGS:BGCP CEO Compensation, October 17th 2019

Is BGC Partners, Inc. Growing?

BGC Partners, Inc. has reduced its earnings per share by an average of 49% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 81% over the last year.

Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.

Has BGC Partners, Inc. Been A Good Investment?

With a total shareholder return of 22% over three years, BGC Partners, Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared total CEO remuneration at BGC Partners, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. So it's certainly hard to argue that the CEO is modestly paid, although we don't see the remuneration as an issue. Shareholders may want to check for free if BGC Partners insiders are buying or selling shares.

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

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.