It's Unlikely That Velocity Financial, Inc.'s (NYSE:VEL) CEO Will See A Huge Pay Rise This Year
Key Insights
Velocity Financial to hold its Annual General Meeting on 17th of May
CEO Chris Farrar's total compensation includes salary of US$630.0k
The total compensation is 143% higher than the average for the industry
Over the past three years, Velocity Financial's EPS grew by 47% and over the past three years, the total shareholder return was 67%
Performance at Velocity Financial, Inc. (NYSE:VEL) has been reasonably good and CEO Chris Farrar has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 17th of May. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
Check out our latest analysis for Velocity Financial
Comparing Velocity Financial, Inc.'s CEO Compensation With The Industry
According to our data, Velocity Financial, Inc. has a market capitalization of US$599m, and paid its CEO total annual compensation worth US$3.9m over the year to December 2023. We note that's an increase of 29% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$630k.
For comparison, other companies in the American Diversified Financial industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.6m. Hence, we can conclude that Chris Farrar is remunerated higher than the industry median. Furthermore, Chris Farrar directly owns US$9.1m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$630k | US$630k | 16% |
Other | US$3.3m | US$2.4m | 84% |
Total Compensation | US$3.9m | US$3.0m | 100% |
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Velocity Financial is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Velocity Financial, Inc.'s Growth
Velocity Financial, Inc. has seen its earnings per share (EPS) increase by 47% a year over the past three years. In the last year, its revenue is up 28%.
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 Velocity Financial, Inc. Been A Good Investment?
We think that the total shareholder return of 67%, over three years, would leave most Velocity Financial, Inc. shareholders smiling. 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...
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Velocity Financial that investors should look into moving forward.
Important note: Velocity Financial 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
