This article will reflect on the compensation paid to Tom Farrell who has served as CEO of Dominion Energy, Inc. (NYSE:D) since 2006. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Dominion Energy.
Comparing Dominion Energy, Inc.'s CEO Compensation With the industry
According to our data, Dominion Energy, Inc. has a market capitalization of US$65b, and paid its CEO total annual compensation worth US$17m over the year to December 2019. Notably, that's an increase of 15% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.6m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$9.7m. This suggests that Tom Farrell is paid more than the median for the industry. What's more, Tom Farrell holds US$95m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. In Dominion Energy's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Dominion Energy, Inc.'s Growth Numbers
Over the last three years, Dominion Energy, Inc. has shrunk its earnings per share by 44% per year. In the last year, its revenue is up 15%.
Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Dominion Energy, Inc. Been A Good Investment?
Dominion Energy, Inc. has served shareholders reasonably well, with a total return of 13% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
As we touched on above, Dominion Energy, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look great when you realize that the company has been suffering from negative EPS growth for the last three years. While shareholder returns are acceptable, they don't delight. So you may want to delve deeper, because we don't think the amount Tom makes is justifiable.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 5 warning signs for Dominion Energy (1 is concerning!) that you should be aware of before investing here.
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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