In 2015 Dave Hager was appointed CEO of Devon Energy Corporation (NYSE:DVN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Dave Hager’s Compensation Compare With Similar Sized Companies?
Our data indicates that Devon Energy Corporation is worth US$8.7b, and total annual CEO compensation was reported as US$12m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.5m.
Thus we can conclude that Dave Hager receives more in total compensation than the median of a group of companies in the same market, and of similar size to Devon Energy Corporation. However, this doesn’t necessarily mean the pay 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 a visual representation of the CEO compensation at Devon Energy, below.
Is Devon Energy Corporation Growing?
On average over the last three years, Devon Energy Corporation has grown earnings per share (EPS) by 51% each year (using a line of best fit). In the last year, its revenue is up 18%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Devon Energy Corporation Been A Good Investment?
Given the total loss of 49% over three years, many shareholders in Devon Energy Corporation 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 Devon Energy Corporation 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, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. So you may want to check if insiders are buying Devon Energy shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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