Is Enbridge Inc.’s (TSE:ENB) CEO Pay Fair?

In 2012 Al Monaco was appointed CEO of Enbridge Inc. (TSE:ENB). First, this article will compare CEO compensation with compensation at other large 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. The aim of all this is to consider the appropriateness of CEO pay levels.

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See our latest analysis for Enbridge

How Does Al Monaco’s Compensation Compare With Similar Sized Companies?

According to our data, Enbridge Inc. has a market capitalization of CA$102b, and pays its CEO total annual compensation worth CA$9.5m. (This number is for the twelve months until December 2018). That’s actually a decrease on the year before. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$1.1m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$6.6m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

It would therefore appear that Enbridge Inc. pays Al Monaco more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Enbridge has changed from year to year.

TSX:ENB CEO Compensation, May 22nd 2019
TSX:ENB CEO Compensation, May 22nd 2019

Is Enbridge Inc. Growing?

On average over the last three years, Enbridge Inc. has shrunk earnings per share by 3.8% each year (measured with a line of best fit). It achieved revenue growth of 1.2% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Enbridge Inc. Been A Good Investment?

With a total shareholder return of 11% over three years, Enbridge Inc. shareholders would, in general, be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We compared total CEO remuneration at Enbridge Inc. with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

And shareholder returns are decent but not great. So you may want to delve deeper, because we don’t think the CEO pay is too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Enbridge.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.