Tom Farrell has been the CEO of Dominion Energy, Inc. (NYSE:D) since 2006. First, this article will compare CEO compensation with compensation at other large companies. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Tom Farrell's Compensation Compare With Similar Sized Companies?
Our data indicates that Dominion Energy, Inc. is worth US$67b, and total annual CEO compensation was reported as US$15m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.6m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Tom Farrell is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Dominion Energy, Inc. is paying too much. 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 Dominion Energy has changed from year to year.
Is Dominion Energy, Inc. Growing?
On average over the last three years, Dominion Energy, Inc. has shrunk earnings per share by 18% each year (measured with a line of best fit). Its revenue is up 17% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. 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 Dominion Energy, Inc. Been A Good Investment?
Dominion Energy, Inc. has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We compared total CEO remuneration at Dominion Energy, Inc. with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. And shareholder returns are decent but not great. So we doubt many shareholders would consider the CEO pay to be particularly modest! So you may want to check if insiders are buying Dominion Energy shares with their own money (free access).
If you want to buy a stock that is better than Dominion Energy, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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