In 2008, Mark Brugger was appointed CEO of DiamondRock Hospitality Company (NYSE:DRH). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Mark Brugger’s Compensation Compare With Similar Sized Companies?
According to our data, DiamondRock Hospitality Company has a market capitalization of US$1.2b, and paid its CEO total annual compensation worth US$4.9m over the year to December 2019. That’s below the compensation, last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$775k. 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$400m to US$1.6b, and the median CEO total compensation was US$3.2m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. Our data reveals that DiamondRock Hospitality allocates salary in line with the wider market.
It would therefore appear that DiamondRock Hospitality Company pays Mark Brugger more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see, below, how CEO compensation at DiamondRock Hospitality has changed over time.
Is DiamondRock Hospitality Company Growing?
DiamondRock Hospitality Company has seen earnings per share (EPS) move positively by an average of 12% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 2.4%.
This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.
Has DiamondRock Hospitality Company Been A Good Investment?
Given the total loss of 42% over three years, many shareholders in DiamondRock Hospitality Company are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at DiamondRock Hospitality Company with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering positive per-share earnings movement, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. Shifting gears from CEO pay for a second, we’ve spotted 3 warning signs for DiamondRock Hospitality you should be aware of, and 1 of them is a bit unpleasant.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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. 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. Thank you for reading.