Is DiamondRock Hospitality Company’s (NYSE:DRH) CEO Pay Fair?

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Mark Brugger has been the CEO of DiamondRock Hospitality Company (NYSE:DRH) since 2008. 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. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for DiamondRock Hospitality

How Does Mark Brugger’s Compensation Compare With Similar Sized Companies?

Our data indicates that DiamondRock Hospitality Company is worth US$2.3b, and total annual CEO compensation is US$4.8m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$765k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.4m.

Thus we can conclude that Mark Brugger receives more in total compensation than the median of a group of companies in the same market, and of similar size to DiamondRock Hospitality Company. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at DiamondRock Hospitality, below.

NYSE:DRH CEO Compensation, February 20th 2019
NYSE:DRH CEO Compensation, February 20th 2019

Is DiamondRock Hospitality Company Growing?

On average over the last three years, DiamondRock Hospitality Company has shrunk earnings per share by 8.9% each year (measured with a line of best fit). Its revenue is down -2.6% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has DiamondRock Hospitality Company Been A Good Investment?

Boasting a total shareholder return of 42% over three years, DiamondRock Hospitality Company has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We examined the amount DiamondRock Hospitality Company 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.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

However, we can’t argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling DiamondRock Hospitality shares (free trial).

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.