Is Denison Mines Corp. (TSE:DML) Overpaying Its CEO?

David Cates has been the CEO of Denison Mines Corp. (TSE:DML) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Denison Mines

How Does David Cates’s Compensation Compare With Similar Sized Companies?

Our data indicates that Denison Mines Corp. is worth CA$366m, and total annual CEO compensation is CA$1.2m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at CA$306k. We looked at a group of companies with market capitalizations from CA$132m to CA$528m, and the median CEO total compensation was CA$876k.

It would therefore appear that Denison Mines Corp. pays David Cates more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Denison Mines has changed over time.

TSX:DML CEO Compensation, August 6th 2019
TSX:DML CEO Compensation, August 6th 2019

Is Denison Mines Corp. Growing?

Denison Mines Corp. has reduced its earnings per share by an average of 7.8% a year, over the last three years (measured with a line of best fit). In the last year, its revenue changed by just 0.3%.

Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.

Has Denison Mines Corp. Been A Good Investment?

With a three year total loss of 6.1%, Denison Mines Corp. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared the total CEO remuneration paid by Denison Mines Corp., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Denison Mines (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.