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Is Dril-Quip, Inc.'s (NYSE:DRQ) CEO Pay Justified?

Simply Wall St

Blake DeBerry became the CEO of Dril-Quip, Inc. (NYSE:DRQ) in 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Dril-Quip

How Does Blake DeBerry's Compensation Compare With Similar Sized Companies?

According to our data, Dril-Quip, Inc. has a market capitalization of US$1.6b, and pays its CEO total annual compensation worth US$4.0m. (This is based on the year to December 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$620k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$3.6m.

So Blake DeBerry receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Dril-Quip has changed from year to year.

NYSE:DRQ CEO Compensation, April 17th 2019

Is Dril-Quip, Inc. Growing?

On average over the last three years, Dril-Quip, Inc. has shrunk earnings per share by 111% each year (measured with a line of best fit). It saw its revenue drop -16% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. 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. Shareholders might be interested in this free visualization of analyst forecasts.

Has Dril-Quip, Inc. Been A Good Investment?

With a three year total loss of 27%, Dril-Quip, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Blake DeBerry is paid around what is normal the leaders of comparable size companies.

Returns have been disappointing and the company is not growing its earnings per share. Few would argue that it's wise for the company to pay any more, before returns improve. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Dril-Quip (free visualization of insider trades).

If you want to buy a stock that is better than Dril-Quip, 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.