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Does DiamondRock Hospitality Company’s (NYSE:DRH) CEO Salary Reflect Performance?

Micheal Lombardo

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Mark Brugger has been the CEO of DiamondRock Hospitality Company (NYSE:DRH) since 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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$2.2b, and total annual CEO compensation is US$4.8m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued 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. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at DiamondRock Hospitality has changed from year to year.

NYSE:DRH CEO Compensation February 14th 19
NYSE:DRH CEO Compensation February 14th 19

Is DiamondRock Hospitality Company Growing?

Over the last three years DiamondRock Hospitality Company has shrunk its earnings per share by an average of 8.9% per year (measured with a line of best fit). It saw its revenue drop -2.6% over the last year.

Sadly for shareholders, earnings per share are actually down, 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. You might want to check this free visual report on analyst forecasts for future earnings.

Has DiamondRock Hospitality Company Been A Good Investment?

Boasting a total shareholder return of 41% 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. So on this analysis we’d stop short of criticizing the level of CEO compensation. Shareholders may want to check for free if DiamondRock Hospitality insiders are buying or selling shares.

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

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.