We Discuss Why Ensign Energy Services Inc.'s (TSE:ESI) CEO Compensation May Be Closely Reviewed

The results at Ensign Energy Services Inc. (TSE:ESI) have been quite disappointing recently and CEO Bob Geddes bears some responsibility for this. At the upcoming AGM on 07 May 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Ensign Energy Services

Comparing Ensign Energy Services Inc.'s CEO Compensation With the industry

According to our data, Ensign Energy Services Inc. has a market capitalization of CA$184m, and paid its CEO total annual compensation worth CA$2.0m over the year to December 2020. That's a notable decrease of 19% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$595k.

On comparing similar-sized companies in the industry with market capitalizations below CA$246m, we found that the median total CEO compensation was CA$665k. Accordingly, our analysis reveals that Ensign Energy Services Inc. pays Bob Geddes north of the industry median. What's more, Bob Geddes holds CA$1.4m worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	CA$595k	CA$700k	30%
Other	CA$1.4m	CA$1.7m	70%
Total Compensation	CA$2.0m	CA$2.4m	100%

Speaking on an industry level, nearly 38% of total compensation represents salary, while the remainder of 62% is other remuneration. It's interesting to note that Ensign Energy Services allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Ensign Energy Services Inc.'s Growth Numbers

Over the last three years, Ensign Energy Services Inc. has shrunk its earnings per share by 46% per year. In the last year, its revenue is down 41%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Ensign Energy Services Inc. Been A Good Investment?

The return of -74% over three years would not have pleased Ensign Energy Services Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Ensign Energy Services (1 is significant!) that you should be aware of before investing here.

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

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