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Is Endeavour Mining Corporation's (TSE:EDV) CEO Overpaid Relative To Its Peers?

Simply Wall St

Sébastien de Montessus became the CEO of Endeavour Mining Corporation (TSE:EDV) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. 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.

View our latest analysis for Endeavour Mining

How Does Sébastien de Montessus's Compensation Compare With Similar Sized Companies?

According to our data, Endeavour Mining Corporation has a market capitalization of CA$3.0b, and paid its CEO total annual compensation worth US$6.8m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$950k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$2.2m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Endeavour Mining stands. Talking in terms of the sector, salary represented approximately 91% of total compensation out of all the companies we analysed, while other remuneration made up 8.7% of the pie. Non-salary compensation represents a greater slice of the remuneration pie for Endeavour Mining, in sharp contrast to the overall sector.

It would therefore appear that Endeavour Mining Corporation pays Sébastien de Montessus 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 a visual representation of the CEO compensation at Endeavour Mining, below.

TSX:EDV CEO Compensation May 6th 2020

Is Endeavour Mining Corporation Growing?

Endeavour Mining Corporation has reduced its earnings per share by an average of 98% a year, over the last three years (measured with a line of best fit). Its revenue is up 18% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Endeavour Mining Corporation Been A Good Investment?

Endeavour Mining Corporation has generated a total shareholder return of 28% over three years, so most shareholders would 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 the total CEO remuneration paid by Endeavour Mining Corporation, 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.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don't think the CEO underpaid. Moving away from CEO compensation for the moment, we've identified 1 warning sign for Endeavour Mining that you should be aware of before investing.

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

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.

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. Thank you for reading.