Yahoo Finance Shareholders May Not Be So Generous With Q2 Holdings, Inc.'s (NYSE:QTWO) CEO Compensation And Here's Why
Key Insights
Q2 Holdings will host its Annual General Meeting on 11th of June
Salary of US$520.0k is part of CEO Matt Flake's total remuneration
Total compensation is 55% above industry average
Q2 Holdings' three-year loss to shareholders was 37% while its EPS grew by 22% over the past three years
The underwhelming share price performance of Q2 Holdings, Inc. (NYSE:QTWO) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 11th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
See our latest analysis for Q2 Holdings
How Does Total Compensation For Matt Flake Compare With Other Companies In The Industry?
At the time of writing, our data shows that Q2 Holdings, Inc. has a market capitalization of US$3.6b, and reported total annual CEO compensation of US$11m for the year to December 2023. That's a notable increase of 40% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$520k.
On comparing similar companies from the American Software industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$7.3m. Accordingly, our analysis reveals that Q2 Holdings, Inc. pays Matt Flake north of the industry median. Moreover, Matt Flake also holds US$1.6m worth of Q2 Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$520k | US$520k | 5% |
Other | US$11m | US$7.6m | 95% |
Total Compensation | US$11m | US$8.1m | 100% |
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Q2 Holdings has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Q2 Holdings, Inc.'s Growth
Q2 Holdings, Inc.'s earnings per share (EPS) grew 22% per year over the last three years. In the last year, its revenue is up 9.0%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Q2 Holdings, Inc. Been A Good Investment?
The return of -37% over three years would not have pleased Q2 Holdings, Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Q2 Holdings primarily uses non-salary benefits to reward its CEO. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Q2 Holdings that investors should be aware of in a dynamic business environment.
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. 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.
