Thomas Peterffy
Interactive Brokers GroupAbout Thomas Peterffy
Founder of Interactive Brokers; Chairman of the Board since November 2006; former CEO (Nov 2006–Sept 2019). Age 80. Biography highlights pioneering application of computers to options pricing (AMEX seat in 1977), building automated market-making across asset classes, and formation of Interactive Brokers in 1993; remains active in strategy, risk, sales/marketing and chairs the Compensation Committee . Performance context: over 5 years, $100 invested in IBKR grew to $391 vs $197 for S&P 500; 2024 net income $3,407 million and adjusted pre-tax margin 72% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Interactive Brokers Group, Inc. | Chief Executive Officer | Nov 2006–Sept 2019 | Led transition from founder-led market-making to global electronic brokerage; strategy and platform scale . |
| Interactive Brokers Group, Inc. | Chairman of the Board | Nov 2006–present | Board leadership; chairs Compensation Committee; member of Steering Committee . |
| American Stock Exchange | Individual Market Maker (Equity Options) | 1977–1980s | Early computerized valuation of equity options; foundation for IBKR automated systems . |
| Interactive Brokers | Founder | 1993–present | Built integrated, automated market-making and brokerage across markets . |
External Roles
- Not disclosed in the proxy for Mr. Peterffy beyond IBKR-related leadership and industry biography .
Fixed Compensation
Three-year summary of pay components:
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary (USD) | $525,000 | $550,000 | $575,000 |
| Bonus (USD) | — | — | — |
| Stock Awards (USD) | — | — | — |
| All Other Compensation (Director Fees) (USD) | $162,500 | $175,000 | $175,000 |
| Total (USD) | $687,500 | $725,000 | $750,000 |
- 2025 base salary: $590,000; salary capped at 0.2% of IBG LLC net income .
Performance Compensation
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Not applicable (no cash bonus or equity awards historically) | — | — | — | — | — |
- Mr. Peterffy historically receives no bonus or long-term incentives, with alignment through significant ownership in IBG Holdings/IBG LLC .
Equity Ownership & Alignment
| Ownership Item | Amount/Status |
|---|---|
| Class A common shares beneficially owned | 1,568,900 (1.44% of Class A outstanding) |
| Class B common stock | 100 shares (100% of Class B via IBG Holdings LLC; votes on an as-converted basis) |
| Voting power via Class B | Approximately 74.2% of aggregate votes; 313,643,354 votes expected at record date |
| Vested vs unvested awards | No outstanding RSUs/options for Mr. Peterffy |
| Hedging/Pledging | Prohibited for directors and employees; no short-selling; no pledging |
| Dividend equivalents on unvested awards | Applicable to plan participants generally; not applicable to Mr. Peterffy (no RSUs) |
Notes on potential supply: Exchange Agreement facilitates annual redemptions of Holdings interests via IBKR share issuance; redemptions require consent of Mr. Peterffy and the Board, and can increase float over time (potential supply from Holdings) .
Employment Terms
| Provision | Details |
|---|---|
| Employment agreements | None for named executive officers; no employment contract for Mr. Peterffy . |
| Severance | None; no severance arrangements for NEOs . |
| Change-of-control | No automatic acceleration in Stock Incentive Plan; Committee may elect actions; not applicable to Mr. Peterffy (no RSUs) . |
| Non-compete/Non-solicit | Restrictive covenant agreements with non-compete and non-solicit post-termination . |
| Clawback | Dodd-Frank/SEC/Nasdaq-compliant clawback for erroneously awarded compensation; additional recoupment policy for wrongdoing . |
| Hedging/Pledging policy | Hedging/short selling/pledging prohibited . |
| Perquisites | Standard employee benefits only; no additional perqs . |
| Salary cap | Chairman salary capped at 0.2% of IBG LLC net income . |
Board Governance
- Roles: Chairman of the Board; Chair, Compensation Committee; Member, Nominating & Corporate Governance Committee; part of IBG LLC Steering Committee .
- Controlled company: Due to substantial ownership by Mr. Peterffy, IBKR is treated as a “controlled company” under Nasdaq rules; not required to have majority independent directors or fully independent compensation/nominating committees .
- Board leadership structure: Separate Chairman, CEO, Lead Independent Director; Lead Independent Director presides over executive sessions and liaises with Chairman .
- Committee meeting cadence (FY 2024): Audit 8, Compensation 3, Nominating & Corporate Governance 2; Board met 4 times; all directors except William Peterffy attended ≥75% of meetings; most directors attended 2024 annual meeting .
Director Compensation
| Item | Amount/Policy |
|---|---|
| Mr. Peterffy director fees (captured in “All Other Compensation”) | $175,000 for FY 2024 . |
| Policy for non-employee directors | Annual retainer $150,000; annual stock award $25,000 (immediate vesting); one-time $75,000 stock award in year of appointment (5-year vest); $25,000 additional retainer per committee chair . |
Compensation Structure Analysis
- No benchmarking/consultants; Compensation Committee (chaired by Mr. Peterffy) sets pay; base salaries modest; majority of NEO pay is variable and stock-based (for others), but Mr. Peterffy’s pay is predominantly fixed salary plus director fees .
- Salary increased from $525k (2022) to $550k (2023) to $575k (2024), with 2025 set at $590k; still capped at 0.2% of IBG LLC net income .
- No options issued historically; equity awards are RSUs to other NEOs with staged vesting; retirement-eligible provisions at age 59 allow continued vesting post-employment, subject to restrictions .
- Company assesses performance qualitatively (no formal metric targets); however, pay-versus-performance disclosure ties CAP to TSR, net income, adjusted margins, and 3-year net revenue growth (most important measures per Committee) .
Vesting Schedules and Insider Selling Pressure
- Mr. Peterffy has no RSUs outstanding; thus, no scheduled vest-related selling pressure for him .
- For other NEOs, RSUs vest in equal installments primarily on or around May 9 annually through 2029, which can concentrate vest-related liquidity events around those dates (general trading dynamic) .
Equity Ownership & Pledging
- Mr. Peterffy beneficially owns all Class B shares through IBG Holdings LLC, enabling control over stockholder votes (as-converted basis, not supervoting); Class B carried ~74.2% voting power at the 2025 record date .
- Hedging and pledging of company stock are prohibited for directors and employees, reducing alignment risk .
Employment Contracts, Severance, Change-of-Control Economics
- No employment or severance agreements; no guaranteed severance or change-of-control benefits; Stock Incentive Plan allows Committee discretion on change-of-control, but no automatic acceleration; not applicable to Mr. Peterffy (no RSUs) .
- Post-employment RSU continuation for retirement-eligible employees requires consulting and non-compete/non-solicit compliance; not applicable to Mr. Peterffy .
Performance & Track Record
- 5-year TSR outperformance vs S&P 500 (IBKR $391 vs S&P $197 from a $100 initial investment); net income and margin expansion in 2024 (NI $3,407m; adjusted pre-tax margin 72%) .
- Founding innovations in electronic trading and automated brokerage underpin IBKR’s long-term efficiency and growth .
Related Party Transactions & Structures
- Up-C structure and Recapitalization: IBG, Inc. is managing member of IBG LLC; IBG, Inc. owns ~25.8% and Holdings ~74.2% of IBG LLC; Mr. Peterffy and affiliates own ~91.4% of Holdings and all its voting membership interests .
- Exchange Agreement: Annual redemptions of Holdings interests facilitated via IBKR common stock issuance; redemptions can be initiated with consent of Mr. Peterffy and Board; increases IBG, Inc.’s ownership of IBG LLC over time .
- Tax Receivable Agreement: IBG, Inc. pays Holdings 85% of realized cash tax savings from basis step-ups; payments could be substantial depending on future purchases and tax law outcomes .
- Margin accounts for directors/officers permitted on ordinary-course terms via Interactive Brokers LLC .
Compensation Peer Group & Benchmarking
- Company does not benchmark executive salaries to competitors and has not used compensation consultants; decisions are committee-driven .
- Pay-versus-performance comparison uses S&P 500 index as the peer group for TSR .
Board Governance Details (Dual-Role Implications)
- Mr. Peterffy simultaneously serves as Chairman and Chair of the Compensation Committee; IBKR’s controlled-company status allows non-independent composition of compensation and nominating committees (governance risk consideration) .
- Lead Independent Director (Lawrence Harris) provides counterbalance with executive-session leadership and liaison responsibilities .
Investment Implications
- Alignment: Extremely high alignment through Class B voting control and substantial Holdings ownership; low cash comp and no variable awards reduce near-term selling pressure for Mr. Peterffy .
- Governance risk: Controlled-company structure and Mr. Peterffy’s chairmanship of Compensation/Nominating committees raise independence concerns; however, board includes a Lead Independent Director and multiple independent directors .
- Supply/trading signal: Monitor Exchange Agreement-driven redemptions and any 13D/13G/Form 4 activity from Holdings/Mr. Peterffy that could increase float or shift voting dynamics; vesting-related supply primarily impacts other NEOs around May each year, not Mr. Peterffy .
- Pay discipline: No severance/change-of-control guarantees and formal clawback policies support shareholder-friendly compensation governance; Chairman salary cap ties fixed pay to profitability .
- Performance backdrop: Strong TSR and profitability metrics underpin confidence in leadership execution; continued oversight necessary given concentrated control .