Key Things To Understand About Devon Energy's (NYSE:DVN) CEO Pay Cheque

This article will reflect on the compensation paid to Dave Hager who has served as CEO of Devon Energy Corporation (NYSE:DVN) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Devon Energy

Comparing Devon Energy Corporation's CEO Compensation With the industry

Our data indicates that Devon Energy Corporation has a market capitalization of US$4.0b, and total annual CEO compensation was reported as US$14m for the year to December 2019. Notably, that's an increase of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$10m. Hence, we can conclude that Dave Hager is remunerated higher than the industry median. Moreover, Dave Hager also holds US$8.5m worth of Devon Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. It's interesting to note that Devon Energy allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Devon Energy Corporation's Growth Numbers

Over the last three years, Devon Energy Corporation has shrunk its earnings per share by 93% per year. It saw its revenue drop 25% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Devon Energy Corporation Been A Good Investment?

With a three year total loss of 64% for the shareholders, Devon Energy Corporation would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Dave is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Devon Energy that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

If you’re looking to trade Devon Energy, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.