Stock Analysis

We Take A Look At Why Endeavour Mining Corporation's (TSE:EDV) CEO Has Earned Their Pay Packet

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We have been pretty impressed with the performance at Endeavour Mining Corporation (TSE:EDV) recently and CEO Sebastien de Montessus deserves a mention for their role in it. Coming up to the next AGM on 25 May 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for Endeavour Mining

How Does Total Compensation For Sebastien de Montessus Compare With Other Companies In The Industry?

At the time of writing, our data shows that Endeavour Mining Corporation has a market capitalization of CA$6.9b, and reported total annual CEO compensation of US$4.5m for the year to December 2020. That's a notable decrease of 17% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$950k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$4.8b and CA$14b had a median total CEO compensation of US$4.5m. So it looks like Endeavour Mining compensates Sebastien de Montessus in line with the median for the industry. What's more, Sebastien de Montessus holds CA$26m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$950k US$950k 21%
Other US$3.5m US$4.4m 79%
Total CompensationUS$4.5m US$5.4m100%

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6% of the pie. It's interesting to note that Endeavour Mining 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.

TSX:EDV CEO Compensation May 18th 2021

A Look at Endeavour Mining Corporation's Growth Numbers

Endeavour Mining Corporation has seen its earnings per share (EPS) increase by 27% a year over the past three years. Its revenue is up 138% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Endeavour Mining Corporation Been A Good Investment?

Most shareholders would probably be pleased with Endeavour Mining Corporation for providing a total return of 36% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

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

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.

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