Travis Stice became the CEO of Diamondback Energy, Inc. (NASDAQ:FANG) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Travis Stice Compare With Other Companies In The Industry?
Our data indicates that Diamondback Energy, Inc. has a market capitalization of US$6.6b, and total annual CEO compensation was reported as US$16m for the year to December 2019. That's a notable increase of 37% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$13m. From this we gather that Travis Stice is paid around the median for CEOs in the industry. Moreover, Travis Stice also holds US$18m worth of Diamondback Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. It's interesting to note that Diamondback 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.
Diamondback Energy, Inc.'s Growth
Diamondback Energy, Inc. has seen its earnings per share (EPS) increase by 1.8% a year over the past three years. It achieved revenue growth of 56% over the last year.
It's hard to interpret the strong revenue growth as anything other than a positive. With that in mind, the modestly improving EPS seems positive. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Diamondback Energy, Inc. Been A Good Investment?
Since shareholders would have lost about 55% over three years, some Diamondback Energy, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Travis is compensated close to the median for companies of its size, and which belong to the same industry. This doesn't look good when you place it against the backdrop of negative shareholder returns and flat earnings growth. CEO pay isn't exceptionally high, but considering poor performance, shareholders will likely hold off support for a raise until results improve.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Diamondback Energy that you should be aware of before investing.
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.
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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