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Is Diamond Offshore Drilling, Inc.'s (NYSE:DO) CEO Pay Fair?

Simply Wall St

Marc Gerard Edwards has been the CEO of Diamond Offshore Drilling, Inc. (NYSE:DO) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Diamond Offshore Drilling

How Does Marc Gerard Edwards's Compensation Compare With Similar Sized Companies?

Our data indicates that Diamond Offshore Drilling, Inc. is worth US$767m, and total annual CEO compensation was reported as US$5.7m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.

It would therefore appear that Diamond Offshore Drilling, Inc. pays Marc Gerard Edwards 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Diamond Offshore Drilling has changed from year to year.

NYSE:DO CEO Compensation, October 17th 2019

Is Diamond Offshore Drilling, Inc. Growing?

Diamond Offshore Drilling, Inc. has increased its earnings per share (EPS) by an average of 42% a year, over the last three years (using a line of best fit). It saw its revenue drop 25% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Diamond Offshore Drilling, Inc. Been A Good Investment?

Since shareholders would have lost about 69% over three years, some Diamond Offshore Drilling, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Diamond Offshore Drilling, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. So you may want to check if insiders are buying Diamond Offshore Drilling shares with their own money (free access).

If you want to buy a stock that is better than Diamond Offshore Drilling, this free list of high return, low debt companies is a great place to look.

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.