Dan Leib became the CEO of Donnelley Financial Solutions, Inc. (NYSE:DFIN) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Dan Leib’s Compensation Compare With Similar Sized Companies?
Our data indicates that Donnelley Financial Solutions, Inc. is worth US$356m, and total annual CEO compensation was reported as US$4.5m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$700k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.7m.
It would therefore appear that Donnelley Financial Solutions, Inc. pays Dan Leib 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 better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Donnelley Financial Solutions, below.
Is Donnelley Financial Solutions, Inc. Growing?
On average over the last three years, Donnelley Financial Solutions, Inc. has shrunk earnings per share by 8.3% each year (measured with a line of best fit). Its revenue is down 10% over last year.
Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Donnelley Financial Solutions, Inc. Been A Good Investment?
Since shareholders would have lost about 56% over three years, some Donnelley Financial Solutions, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Donnelley Financial Solutions, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years. Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Donnelley Financial Solutions (free visualization of insider trades).
Important note: Donnelley Financial Solutions may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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