Is Enbridge Inc. (TSE:ENB) Excessively Paying Its CEO?

Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!

In 2012 Al Monaco was appointed CEO of Enbridge Inc. (TSE:ENB). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Enbridge

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

At the time of writing our data says that Enbridge Inc. has a market cap of CA$97b, and is paying total annual CEO compensation of CA$13m. (This is based on the year to 2017). While we always look at total compensation first, we note that the salary component is less, at CA$1.2m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$6.5m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Thus we can conclude that Al Monaco receives more in total compensation than the median of a group of large companies in the same market as Enbridge Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Enbridge, below.

TSX:ENB CEO Compensation, February 20th 2019
TSX:ENB CEO Compensation, February 20th 2019

Is Enbridge Inc. Growing?

Enbridge Inc. has increased its earnings per share (EPS) by an average of 4.9% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 4.5%.

I’d prefer higher revenue growth, but I’m happy with the modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.

Has Enbridge Inc. Been A Good Investment?

Enbridge Inc. has served shareholders reasonably well, with a total return of 30% over three years. 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 examined the amount Enbridge Inc. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.

One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. Considering this, we wouldn’t want to see any big pay rises, although we’d stop short of calling the CEO compensation unfair. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Enbridge (free visualization of insider trades).

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.