Tom Farrell has been the CEO of Dominion Energy, Inc. (NYSE:D) since 2006, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Dominion Energy.
Comparing Dominion Energy, Inc.’s CEO Compensation With the industry
Our data indicates that Dominion Energy, Inc. has a market capitalization of US$67b, and total annual CEO compensation was reported as US$17m for the year to December 2019. We note that’s an increase of 15% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.6m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.7m. Accordingly, our analysis reveals that Dominion Energy, Inc. pays Tom Farrell north of the industry median. Moreover, Tom Farrell also holds US$97m worth of Dominion Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 13% of total compensation represents salary, while the remainder of 87% is other remuneration. It’s interesting to note that Dominion Energy allocates a smaller portion of compensation to salary in comparison to the broader industry. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
A Look at Dominion Energy, Inc.’s Growth Numbers
Over the last three years, Dominion Energy, Inc. has shrunk its earnings per share by 44% per year. In the last year, its revenue is up 15%.
Overall this is not a very positive result for shareholders. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for us to put aside my concerns around EPS. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Dominion Energy, Inc. Been A Good Investment?
With a total shareholder return of 15% over three years, Dominion Energy, Inc. shareholders would, in general, be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Tom is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn’t look great when you realize that the company has been suffering from negative EPS growth for the last three years. While shareholder returns are acceptable, they don’t delight. So you may want to delve deeper, because we don’t think the amount Tom makes is justifiable.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Dominion Energy you should be aware of, and 1 of them is a bit concerning.
Switching gears from Dominion Energy, if you’re hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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.
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