Justin Leonard
About Justin Leonard
Justin L. Leonard (age 47) is President and Chief Operating Officer of DiamondRock Hospitality, promoted on April 15, 2024 after joining as EVP, Asset Management and COO on July 18, 2022; he holds a B.B.A. in Real Estate from the University of Wisconsin and previously spent 20+ years at Walton Street Capital overseeing 60 hotels and over $4B of dispositions . Company execution during 2024 included 5.1% revenue growth to $1.130B, 5.8% growth in Hotel Adjusted EBITDA to $318.6M, and an 8.6% increase in Adjusted FFO per share, alongside net debt/Adjusted EBITDA of 3.5x and liquidity of ~$584.3M . For long-term incentives, DRH’s 3‑year relative TSR finished at the 60th percentile but absolute TSR was negative, capping the TSR PSU payout at 100% of target; hotel market-share PSUs for the 2022 grant vested at 92.2% (47% of hotels improved share) . In 2024, a $100 initial investment in DRH ended at $87 (peer index $93), underscoring near-term TSR pressure despite operational gains .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| DiamondRock Hospitality (NYSE: DRH) | President & COO | Apr 15, 2024–Present | Oversees investments (acquisitions/dispositions/redevelopment), asset management and operations . |
| DiamondRock Hospitality (NYSE: DRH) | EVP, Asset Mgmt & COO | Jul 18, 2022–Apr 14, 2024 | Led asset management; assumed responsibilities previously overseen by CIO as of 2024 transition . |
| Walton Street Capital | Senior Principal | 20+ years; oversaw hotels since 2007 | Directed asset mgmt of 60 hotels (20,800 rooms) and sold 50+ hotels ($4B+ gross value) . |
External Roles
- No public company directorships or external roles disclosed for Leonard in the latest proxy .
Fixed Compensation
| Item | 2023 | 2024 | 2025 |
|---|---|---|---|
| Base salary ($) | 511,700 | 575,000 rate; paid 562,458 (promotion Apr 15) | 650,000 |
| Target annual cash incentive (% of salary) | 125% | 125% | 125% (structure unchanged in proxy narrative) |
| 2024 annual cash incentive earned ($) | — | 1,020,041 (177.4% of base salary; 141.9% of target) | — |
| All other compensation (401k match) ($) | 13,200 | 13,800 | — |
Performance Compensation
Annual Cash Incentive – 2024 Structure and Results
| Metric | Weight | Threshold | Target | Maximum | Actual 2024 | Payout Comment |
|---|---|---|---|---|---|---|
| Hotel Adjusted EBITDA | 50% | $260.7M | $306.7M | $352.7M | $318.6M | Contributed to joint payout of 141.9% . |
| Adjusted FFO per share | 20% | $0.83 | $0.98 | $1.12 | $1.04 | Contributed to joint payout of 141.9% . |
| GRESB Real Estate Assessment | 2% | 80 | 82 | 84 | 86 | Above max . |
| GRESB Public Disclosure | 2% | 80 | 82 | 84 | 98 | Above max . |
| ISS Governance Score | 2% | 5 | 4 | 3 | 1 | Above max . |
| Balance sheet liquidity | 2.5% | $475M | $500M | $525M | $584.3M | Above max . |
| 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 | Slightly above target . |
| Individual strategic objectives (Leonard) | 10% | — | — | — | 150% of target | Execution on ops, capital plans, deals, and operator relations . |
- Result: Joint objectives paid at 141.9% of target; Leonard’s individual objectives at 150%; total cash incentive $1,020,041 (177.4% of base salary; 141.9% of target) .
Long-Term Equity Incentives
- 2024 annual grant mix: 50% time-based RSUs/LTIP; 50% PSUs (3-year) .
- 2025 design change: increase performance-based mix to 60% and make PSUs 100% based on relative TSR over 3 years .
| Award | Grant date | Instrument/vesting | Quantity | Grant-date fair value ($) |
|---|---|---|---|---|
| Time-based LTIP units/RSUs | May 7, 2024 | Vests ratably Feb 27, 2025/26/27 | 97,477 | 850,000 |
| PSUs (3-yr) | May 7, 2024 | Target; vest at end of performance period | 101,666 (target); 50,833 thr; 152,499 max | 850,000 |
PSU performance mechanics and recent outcomes:
- Relative TSR PSUs: 0–150% payout; negative TSR cap applies. For the 3‑year period ended Feb 2025, DRH finished ~60th percentile; cap reduced payout to 100% due to negative absolute TSR .
- Hotel market-share PSUs: 0–150% payout based on % of hotels improving STR market share; the 2022 grant paid at 92.2% (47% of hotels improved) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 16,778 shares (unvested RSUs counted under SEC rules) (<1%); excludes 33,558 DSUs, 231,449 unvested PSUs, and 107,635 LTIP units . |
| Outstanding unvested time-based awards (12/31/24) | 42,650 LTIP units (8/9/2022); 33,557 RSUs (2/23/2023); 97,447 RSUs/LTIP (5/7/2024) . |
| Market value of unvested time-based awards | $385,130; $303,020; $879,946 respectively (at $9.03/sh) . |
| Unearned PSUs outstanding (12/31/24) | 108,542; 76,151; 153,566 units for 2022/2023/2024 cycles . |
| Market/payout value of unearned PSUs | $980,134; $687,644; $1,386,701 respectively (valuation per proxy) . |
| Ownership guidelines | 3x base salary; compliance: Yes (Leonard) . |
| Hedging/pledging | Prohibited for executives; no pledging allowed (reduces forced-selling risk) . |
| Deferred compensation | 2024 equity deferral: $154,028 contributed; 2024 earnings (loss): ($2,517); 12/31/24 balance: $151,514 . |
Vesting cadence and potential supply:
- 8/9/2022 LTIP units vest Aug 9, 2025/2026/2027 (ratable) .
- 2/23/2023 RSUs vest Feb 27, 2025 and Feb 27, 2026 (ratable) .
- 5/7/2024 RSUs/LTIP vest Feb 27, 2025/2026/2027 (ratable) .
Employment Terms
| Provision | Summary terms |
|---|---|
| Severance multiple (no change-in-control) | Lump sum = 2x (base salary + target bonus) for Leonard upon termination without cause or resignation for good reason; plus pro‑rated bonus at target and 18 months of benefits . |
| Severance multiple (following change-in-control) | Lump sum = 3x (base salary + target bonus) for Leonard with double trigger; PSUs determined as of change-in-control and remain service-vesting unless assumed; acceleration on non-assumption or qualifying termination . |
| Cost of termination (12/31/24) | Without CoC: total $6,779,146 (cash $2,587,500; pro-rata bonus $718,750; benefits $60,215; unvested shares/LTIP $1,276,864; PSUs $2,135,817) . With CoC: total $8,379,164 (cash $3,881,250; pro-rata bonus $718,750; benefits $60,215; unvested shares/LTIP $1,583,132; PSUs $2,135,817) . |
| Non-compete | 12 months post-termination if severance paid (U.S. lodging-oriented REITs); not applicable after a change-in-control . |
| Clawback | Mandatory recovery of incentive-based comp upon financial restatement (Rule 10D-1 compliant) . |
| Other policies | Anti-hedging/short sales and anti-pledging; minimum one-year vesting on exec equity; no stock options granted in over a decade . |
Performance & Track Record
| Measure | 2024 result | Notes |
|---|---|---|
| Revenues | $1.130B (+5.1% YoY) | Portfolio execution and pricing power . |
| Hotel Adjusted EBITDA | $318.6M (+5.8% YoY) | Operating leverage; non-GAAP measure per 10‑K . |
| Adjusted FFO per share | $1.01 (+8.6% YoY) | Non‑GAAP; proxy references 10‑K reconciliations . |
| Comparable RevPAR | $205.15 (+2.6% YoY) | Demand environment supportive . |
| Net debt/Adjusted EBITDA | 3.5x | Balance sheet discipline . |
| Liquidity | ~$584.3M | Supports capex and flexibility . |
| TSR context | $100 → $87 (2024); negative absolute TSR over 3-yr PSU period | Drove TSR PSU cap to 100% despite ~60th percentile relative performance . |
Compensation Structure Analysis
- Mix: Leonard’s 2024 target pay included meaningful equity (50% time-based, 50% PSUs); 2025 increases performance-based weighting to 60% and concentrates PSUs on relative TSR, tightening pay-for-performance linkage .
- Annual plan rigor: 2024 joint metrics favored cash flow (EBITDA 50%, FFO/share 20%) with governance/ESG and balance sheet goals; payout at 141.9% reflects outperformance on EBITDA/FFO and balance sheet targets .
- Peer benchmarking: Leonard’s 2024 target pay ranked ~4th of 14 for comparable roles in the REIT competitive set (reflecting combined CIO/COO scope) .
- Say-on-pay: 96% approval in 2024 indicates investor support for program design and outcomes .
Equity Ownership & Alignment
| Policy/Guideline | Status |
|---|---|
| Stock ownership guideline (3x salary) | Compliant (Leonard) . |
| Prohibition on pledging/hedging | In force for executives . |
| Ownership breakdown | See table above; significant unvested equity that aligns multi‑year value creation . |
Employment Terms (Severance & CoC Economics)
| Component | Without CoC | With CoC |
|---|---|---|
| Cash severance | 2x (base+target bonus) | 3x (base+target bonus) |
| Pro-rated target bonus | Yes | Yes |
| Benefits continuation | 18 months | 18 months |
| Time-based equity | Vests (subject to proration for <12 months old awards) | Determined at CoC; service-vesting continues unless assumed; accelerate on non-assumption or qualifying termination |
| PSUs | Vest at target on qualifying termination (no CoC) | Earned based on performance as of pre‑CoC date; service vesting thereafter per terms |
Investment Implications
- Alignment and retention: Leonard exceeds ownership guidelines with no pledging allowed; multi-year RSU/LTIP vesting (Feb each year) and PSU cycles encourage retention and reduce misalignment risk .
- Vesting overhang vs. trading pressure: Material scheduled vesting in Feb 2025/2026/2027 and Aug 2025/2026/2027 could create episodic supply, but policy restrictions (ownership guidelines, anti-pledging/hedging) temper near-term selling risk .
- Pay-for-performance torque: 2025 shift to 60% TSR-based PSUs increases upside/downside with relative performance; negative TSR cap remains an investor-friendly guardrail .
- Change-in-control math: Double-trigger 3x (base+bonus) and full equity treatment drive potential costs of ~$8.38M for Leonard as of 12/31/24, relevant for M&A scenario modeling .
- Execution track: 2024 operational KPIs improved (EBITDA, FFO/share, RevPAR) under the new leadership structure; TSR lag and the TSR-cap outcome signal room for improvement in market perception despite fundamentals .