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How Should Investors React To Diamond Hill Investment Group, Inc.’s (NASDAQ:DHIL) CEO Pay?

Simply Wall St

In 2016 Chris Bingaman was appointed CEO of Diamond Hill Investment Group, Inc. (NASDAQ:DHIL). 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 process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Diamond Hill Investment Group

How Does Chris Bingaman’s Compensation Compare With Similar Sized Companies?

Our data indicates that Diamond Hill Investment Group, Inc. is worth US$468m, and total annual CEO compensation is US$889k. (This is based on the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$300k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO compensation of that group was US$1.5m.

Most shareholders would consider it a positive that Chris Bingaman takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Diamond Hill Investment Group has changed from year to year.

NasdaqGS:DHIL CEO Compensation, February 27th 2019

Is Diamond Hill Investment Group, Inc. Growing?

Diamond Hill Investment Group, Inc. has increased its earnings per share (EPS) by an average of 9.2% a year, over the last three years (using a line of best fit). In the last year, its revenue changed by just 0.3%.

I would argue that the improvement in revenue isn’t particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Diamond Hill Investment Group, Inc. Been A Good Investment?

Given the total loss of 7.8% over three years, many shareholders in Diamond Hill Investment Group, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

It looks like Diamond Hill Investment Group, Inc. pays its CEO less than similar sized companies.

Chris Bingaman is paid less than CEOs of similar size companies, but growth hasn’t been particularly impressive and the total shareholder return over three years would leave many disappointed. So while shareholders shouldn’t be overly concerned about CEO compensation, they would probably like to see improved shareholder returns before seeing a pay increase. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Diamond Hill Investment Group (free visualization of insider trades).

If you want to buy a stock that is better than Diamond Hill Investment Group, 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.