Ian Dundas has been the CEO of Enerplus Corporation (TSE:ERF) since 2013, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Enerplus
How Does Total Compensation For Ian Dundas Compare With Other Companies In The Industry?
At the time of writing, our data shows that Enerplus Corporation has a market capitalization of CA$556m, and reported total annual CEO compensation of CA$4.3m for the year to December 2019. That’s a modest increase of 7.6% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$581k.
On examining similar-sized companies in the industry with market capitalizations between CA$264m and CA$1.1b, we discovered that the median CEO total compensation of that group was CA$2.0m. Accordingly, our analysis reveals that Enerplus Corporation pays Ian Dundas north of the industry median. What’s more, Ian Dundas holds CA$364k worth of shares in the company in their own name.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CA$581k | CA$527k | 13% |
| Other | CA$3.8m | CA$3.5m | 87% |
| Total Compensation | CA$4.3m | CA$4.0m | 100% |
On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. It’s interesting to note that Enerplus allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
Enerplus Corporation’s Growth
Over the last three years, Enerplus Corporation has shrunk its earnings per share by 93% per year. In the last year, its revenue is down 24%.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has Enerplus Corporation Been A Good Investment?
With a three year total loss of 77% for the shareholders, Enerplus Corporation would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude…
As we touched on above, Enerplus Corporation 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 good against shareholder returns, which have been negative for the past three years. What’s equally worrying is that the company isn’t growing by our analysis. Overall, with such poor performance, shareholder’s would probably have questions if the company decided to give the CEO a raise.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That’s why we did some digging and identified 3 warning signs for Enerplus that investors should think about before committing capital to this stock.
Important note: Enerplus is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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