Greenhill & Co has a market cap of $1.32 billion; its shares were traded at around $45.72 with a P/E ratio of 31.4 and P/S ratio of 4.5. The dividend yield of Greenhill & Co stocks is 4%.
Highlight of Business Operations:With the addition of new offices as well as employees focused on new industry sectors our expenses have also increased. With an increase in our headcount from 234 as of January 1, 2009 to 316 as of December 31, 2011 our compensation costs and other non-compensation costs, such as occupancy, travel and information services have increased. This expansion, combined with a modest upturn in revenue over the past few years, increased our cost ratios. In 2011, our ratio of compensation and benefits expense to revenue was 53%(2) (55% on a U.S. GAAP basis) and while down from 57% in 2010, and below our closest competitive peers, it was still above our historic policy goal of maintaining a ratio not to exceed 50%. Our pre-tax margin in 2011 was 26%(2) (23% on a U.S. GAAP basis) compared to our historical range of 44% to 21% during the years 2007 to 2010. While we will continue to recruit senior bankers on an opportunistic basis, our priority in the near term will be to realize the benefits of our expansion as transaction activity rebounds and to seek to return towards our historic cost ratios.
We earned advisory revenues from 160 different clients in 2011, up 14% compared to 140 in 2010. We earned $1 million or more from 74 clients in 2011, up 30% compared to 57 in 2010, and 26% of those were new to the firm in 2011 compared to 44% in 2010. The ten largest fee-paying clients contributed 35% and 36% to our total revenues in 2011 and 2010, respectively, and only one of our ten largest fee-paying clients in 2011 had in any prior year been among our ten largest fee-paying clients. In 2011, we did not have any client engagements that accounted for 10% or more of our total revenue. From a global perspective in 2011, compared to 2010, our advisory revenues increased in Australia, North America and Europe and declined in Japan.
We recognize gains or losses from our investment in Iridium from marking to market our holdings at the end of each period to record unrealized gains or losses. To the extent we sell our holdings in Iridium for a price above or below our mark for the previously reported period we recognize realized gains or losses on such sales during the period of sale. At December 31, 2011, we owned 8,934,016 shares of Iridiums common stock, or approximately 12% of Iridiums common stock on a fully diluted basis, which had a value of $68.9 million. At December 31, 2010, we owned 8,924,016 shares of Iridiums common stock and 4,000,000 Iridium $11.50 warrants (NASDAQ: IRDMZ), or approximately 12% of Iridiums common stock on a fully diluted basis. In 2011 the fair market value of our investment in Iridium declined by $6.2 million as compared to a gain of $5.0 million in 2010. In 2009, we recorded an unrealized gain of $42.2 million in our investment in Iridium as a result of the business combination with GHL Acquisition Corp.
2011 versus 2010. For the year ended December 31, 2011, the firm recorded a loss of $8.8 million in merchant banking and other investment revenues compared to a gain of $26.1 million for the year ended December 31, 2010. The decline in our 2011 merchant banking and other investment revenues of $34.9 million as compared to 2010 primarily resulted from the absence of merchant banking management fees due to our discontinuation of the management of merchant banking funds at year-end 2010, the net decrease in value of our investment in Iridium of $11.2 million and a net change in unrealized losses recognized from our investments in our historic merchant banking funds of $11.2 million. For the year ended December 31, 2010, we earned management fee revenue of $12.9 million. The firm had no gains (or losses) from any single investment in 2011 that accounted for more than 10% of total revenues.
2011 versus 2010. For the year ended December 31, 2011, on a U.S. GAAP basis, our employee compensation and benefits expenses were $162.6 million and excluding the accelerated compensation charge were $155.5 million compared to $159.9 million for the prior year. The decrease of $4.4 million, or 3%, principally resulted from lower amortization of restricted stock units due to the departure of certain employees who forfeited their awards. The compensation and benefits expenses, excluding the accelerated compensation charge, in 2011 also declined as compared to 2010 due to a reduction in the ratio of compensation expense to total revenues to 53% from 57% in 2010 given a slightly higher revenue base in 2011 as compared to 2010. For 2011, our first full year after the separation from the merchant banking business, the ratio of compensation expense, excluding the accelerated compensation charge, to advisory (rather than total) revenues was 51%. On a U.S. GAAP basis the ratio of compensation expense to total revenues was 55%.
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