Jeffrey Donnelly
About Jeffrey Donnelly
Jeffrey J. Donnelly, age 54, is Chief Executive Officer of DiamondRock Hospitality (DRH) and a director, appointed CEO on April 15, 2024 after serving as EVP & CFO since August 2019. He previously led Lodging & Real Estate equity research at Wells Fargo Securities (and predecessors), and earlier held roles at Wachovia/First Union/EVEREN and AEW Capital; he holds a B.B.A. in Finance (minors in Economics & Psychology), is a CFA and CMA, and serves on the board of Piedmont Office Realty Trust (NYSE: PDM) . In 2024, DRH reported $1.130B in revenues and $318.6M in Hotel Adjusted EBITDA, repurchased 3.1M shares for $26.0M at $8.33 avg, ended with net debt/Adjusted EBITDA of 3.5x and liquidity of ~$584.3M; a $100 initial investment measured by TSR was $87 vs $93 for the peer index in 2024 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| DiamondRock Hospitality | CEO; Director | CEO since Apr 15, 2024; Director since 2024 | Leads strategy and operations; added to board as part of CEO transition . |
| DiamondRock Hospitality | EVP & CFO | 2019–Apr 2024 | Oversaw capital markets, finance, IR, internal audit; key role in balance sheet and capital allocation . |
| Wells Fargo Securities (and predecessors) | MD, Equity Research; co-founded Real Estate & Lodging research platform | 2008–2019 | Highly ranked lodging/REIT analyst; deep capital markets perspective . |
| Wachovia Securities / First Union / EVEREN | Various roles | 1998–2008 | Sell-side and banking roles supporting lodging/real estate coverage . |
| AEW Capital Management | Assistant Vice President | 1992–1998 | Fiduciary responsibilities in asset mgmt and capital markets for diversified real estate portfolio . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Piedmont Office Realty Trust (NYSE: PDM) | Director | Current | Public company board service . |
| Rubinstein-Taybi Syndrome Children’s Foundation | Founder & Trustee | Current | Non-profit leadership . |
Fixed Compensation
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Base Salary ($) | 511,700 | 700,000 rate after Apr 15; total paid $656,250 | 750,000 |
| Target Cash Incentive (% of salary) | — | 150% target; 75% threshold; 300% max | — |
| Actual Cash Incentive ($) | 435,094 | 1,490,147 (141.9% of target; 212.9% of base) | — |
| 2024 Stock Awards (Grant-date fair value, $) | 1,100,000 | 2,750,000 | — |
Performance Compensation
- Annual cash incentive (2024 design): 90% based on joint corporate objectives (Hotel Adjusted EBITDA, Adjusted FFO/share, ESG/ISS scores, balance sheet KPIs) and 10% on individual objectives. Based on performance, executives earned 141.9% of target for joint objectives; Donnelly earned 150% of target on individual goals, resulting in total payout at 141.9% of target and 212.9% of base salary for him .
| Joint Objective (2024) | Weight | Threshold | Target | Max | Actual | Result |
|---|---|---|---|---|---|---|
| Hotel Adjusted EBITDA | 50% | $260.7M | $306.7M | $352.7M | $318.6M | Above target |
| Adjusted FFO/share | 20% | $0.83 | $0.98 | $1.12 | $1.04 | Above target |
| GRESB Real Estate Assessment | 2% | 80 | 82 | 84 | 86 | Max |
| GRESB Public Disclosure | 2% | 80 | 82 | 84 | 98 | Max |
| ISS Governance Score | 2% | 5 | 4 | 3 | 1 | Max |
| ISS Environmental Score | 2% | 5 | 4 | 3 | 3 | Target |
| ISS Social Score | 2% | 5 | 4 | 3 | 3 | Target |
| Liquidity | 2.5% | $475M | $500M | $525M | $584.3M | Max |
| Total Debt+Pref/Gross Assets | 2.5% | 33% | 30% | 27% | 29.2% | Above target |
| Net Debt/Adj. EBITDA | 2.5% | 4.2x | 3.8x | 3.4x | 3.5x | Above target |
| Fixed Charge Coverage | 2.5% | 2.75x | 3.0x | 3.25x | 3.05x | Target+ |
- Long-term equity (2024 grants): 50% time-based RSUs/LTIPs (3-year ratable vesting) and 50% PSUs with two metrics: 50% Relative TSR vs lodging REIT peers over 3 years (0–150% payout; negative TSR cap applies), and 50% hotel market share improvement via STR benchmarking (0–150% payout). For the 2022–2025 PSU cycles: relative TSR tranche paid at 100% (capped due to negative absolute TSR) and hotel market share tranche earned at 92.2% of target (47% of hotels improved) . For 2025 awards, mix shifts to 60% performance-based with 100% of PSU performance metric in relative TSR (3-year) to increase performance leverage .
| 2024 LTI Grants to Donnelly (Grant date 5/7/2024) | Shares/Units | Vesting/Performance | Grant-date FV ($) |
|---|---|---|---|
| Time-based RSUs | 157,683 | Ratable vest 2/27/2025–2027 | 1,375,000 |
| PSUs (target) | 164,458 | 50% 3-yr relative TSR; 50% 3-yr hotel market share; 0–150% payout; negative TSR cap | 1,375,000 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 416,886 shares; includes 201,427 unvested restricted shares and 215,149 owned shares; also 88,086 deferred stock units and unvested PSUs not counted as beneficial under SEC rules . |
| Outstanding unvested time-based awards (12/31/2024) | 75,798 (3/2/2021); 17,433 (2/22/2022); 41,014 (2/23/2023); 157,683 (5/7/2024) . |
| Outstanding PSUs shown (max units, 12/31/2024) | 80,096 (2022 grant max); 93,129 (2023 grant max); 248,411 (2024 grant max) . |
| Stock vested in 2024 | 80,051 restricted shares; 49,827 PSUs (95.6% of 2021 PSU target) . |
| Ownership guidelines | CEO must hold stock = 6x base salary; calculation uses $8.85 avg price (first 10 trading days of 2025). Donnelly is in compliance; sales restricted if it would breach guideline; performance-based awards don’t count until earned . |
| Hedging/pledging | Hedging (puts/calls/derivatives) and pledging of Company stock prohibited for directors and executives . |
| Option usage | Company has not granted stock options in over a decade; no options outstanding . |
Vesting cadence and potential liquidity: Donnelly’s time-based awards vest on set dates (e.g., 2024 grant ratably on Feb 27 of 2025–2027; 2023 grant ratably on Feb 27 of 2025–2026; 2022 grant on Feb 27, 2025), which can create periodic vesting-related liquidity events; anti-hedging/pledging rules reduce alignment risk .
Employment Terms
| Provision | Economics / Terms |
|---|---|
| Severance (no CoC) | Lump sum = 2x (base + target bonus); plus pro-rated target bonus; 18 months medical/dental; immediate vesting of time-based equity (prorated for recent grants); PSUs vest at target . |
| Severance (post-CoC double-trigger) | Lump sum = 3x (base + target bonus); similar benefits; treatment of PSUs based on performance through CoC date with continued service vest; vest accelerates if awards not assumed or on qualifying termination . |
| Non-compete | 12 months post-termination (if severance paid); covers lodging-oriented REITs in U.S.; non-compete does not apply following a change of control . |
| Clawback | SEC 10D-1 compliant clawback adopted Oct 2, 2023; recovers incentive comp tied to financial reporting measures upon restatement (3-year lookback; no fault standard) . |
| Insider trading policy | Comprehensive policy filed as Exhibit 19 to 2024 10-K; prohibits short sales and derivatives; preclearance process in place . |
| Perquisites | As a director, eligible for up to $15,000 annual reimbursement for hotel stays and related expenses; also broad-based employee benefits (health, life, disability, 401k match) . |
Cost to DRH if terminated 12/31/2024 (illustrative, from proxy calculations):
| Scenario | Cash Severance ($) | Prorated Bonus ($) | Med/Dental ($) | Unvested Time-based Equity ($) | PSUs ($) | Total ($) |
|---|---|---|---|---|---|---|
| Without Cause / Good Reason (no CoC) | 3,500,000 | 1,050,000 | 75,488 | 2,068,874 | 2,720,973 | 9,415,335 |
| Without Cause / Good Reason (post-CoC) | 5,250,000 | 1,050,000 | 75,488 | 2,749,297 | 2,720,973 | 11,845,758 |
| Death/Disability | — | 1,050,000 | 75,488 | 2,068,874 | 2,720,973 | 5,915,335 |
Notes: Medical costs are based on 2024 average family plan; equity values assumed at $9.03 year-end price; PSU valuation assumptions per proxy; no excise tax gross-ups .
Performance & Track Record
- 2024 operating outcomes: Revenues $1.130B (+5.1% y/y), Hotel Adjusted EBITDA $318.6M (+5.8% y/y), comparable RevPAR $205.15 (+2.6% y/y), Adjusted FFO/share $1.01 (+8.6% y/y) .
- Capital allocation: Repurchased 3.1M shares at $8.33 average ($26.0M), completed ~$82M capex, acquired AC Hotel Minneapolis Downtown for $30M, refinanced/extended debt, ended with 3.5x net debt/Adj. EBITDA and ~$584.3M liquidity .
- Sustainability/ESG recognition: GRESB Global Listed Sector Leader (Hotels); NAREIT Leader in the Light (Lodging/Resorts, 2024) .
- Pay-for-performance alignment: 2024 Say-on-Pay support at 96%; equity heavily performance-based; negative TSR cap applied to relative TSR PSU payouts .
Board Governance (Director Service and Dual-Role Implications)
- Board service: Donnelly was elected to the DRH board effective May 2, 2024; he is not independent under NYSE rules as CEO .
- Committee roles: No executives serve on Audit, Compensation, or Nominating & Corporate Governance Committees; all members are independent; committee chairs are independent (Audit: Shaw; Compensation: Wardinski; N&CG: Chi) .
- Leadership structure: CEO and Chair roles are separated (Chairman McCarten); Lead Independent Director (Wardinski) provides additional counterbalance; independent directors meet in executive sessions .
- Attendance: Board met six times in 2024; all directors attended at least 75% of board and committee meetings .
- Director compensation: Employees receive no separate director pay (Donnelly excluded from director comp table) .
Director Compensation (Context for dual roles)
| Element | 2024 Non-Employee Director Program |
|---|---|
| Cash retainer | $95,000 board retainer; additional retainers for Chair, Lead Director, and committee chairs (e.g., $100,000 Chair; $75,000 Lead+Comp Chair combined for Wardinski) . |
| Equity | ~$110,000 in fully-vested shares or deferred stock units; immediate vesting; deferral optional . |
| Ownership policy | 5x annual cash retainer; 5-year compliance window . |
Compensation Peer Group (Benchmarking)
Peer set (lodging-focused and select non-lodging REITs) used for 2024/2025 benchmarking included: AKR, APLE, CLDT, ELME, JBGS, PK, PEB, RLJ, RHP, INN, SHO, XHR; HST reviewed separately given size; DRH market cap ~$1.875B as of 12/31/24, ~53rd percentile vs the set .
Say-on-Pay & Shareholder Feedback
- Annual Say-on-Pay frequency; 2024 support at 96% of votes cast .
- Committee engages FW Cook as independent advisor; no conflicts identified .
Expertise & Qualifications
- Credentials: CFA and CMA; B.B.A. in Finance from George Washington University with dual minors (Economics & Psychology) .
- Relevant skills: Capital markets and finance, corporate governance, compensation policy, corporate management, REIT and lodging expertise per board skills matrix .
Work History & Career Trajectory
- Sell-side to operator transition: From top-ranked lodging/REIT analyst to CFO and then CEO at DRH; earlier buy-side/asset management at AEW .
- Public company board experience: Director at PDM .
Compensation Structure Analysis
- Increased performance-at-risk: 2025 increased performance-conditioned LTI to 60% and simplified PSU metric to 100% relative TSR over 3 years .
- Shift away from options: No stock options granted in over a decade (full-value shares and PSUs dominate), reducing risk of option repricing concerns .
- Strong governance: Clawback in place; anti-hedging/pledging; stock-ownership and sale restrictions until guideline met .
Related Party Transactions; Risk Indicators
- Related party transactions: None material in 2024 .
- Red flags mitigants: Anti-hedging/anti-pledging; double-trigger CoC; no option repricing; robust ownership guidelines; strong Say-on-Pay results .
Investment Implications
- Pay-for-performance linkage: 2024 cash incentives paid above target align with EBITDA and FFO outperformance; 2025 PSU program raises performance mix and focuses entirely on relative TSR, increasing external performance pressure on management comp outcomes .
- Alignment and overhang: CEO has significant unvested equity with structured vesting dates and PSUs; anti-pledging reduces misalignment risk; periodic vesting can create supply events but ownership policy constrains discretionary selling .
- Retention/change-in-control economics: Two-times salary+bonus (three-times post-CoC) is standard REIT market practice; 12-month non-compete (waived post-CoC) balances retention with marketability; PSU target vesting on terminations removes downside but keeps upside capped absent outperformance .
- Governance checks on dual role: Separation of Chair/CEO and strong independent committee structure mitigate CEO-director dual-role concerns; board processes include regular executive sessions and lead independent director structure .