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Is Fortuna Silver Mines Inc.'s (TSE:FVI) CEO Salary Justified?

Simply Wall St

In 2008 Jorge A. Ganoza Durant was appointed CEO of Fortuna Silver Mines Inc. (TSE:FVI). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Fortuna Silver Mines

How Does Jorge A. Ganoza Durant's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Fortuna Silver Mines Inc. has a market cap of CA$848m, and reported total annual CEO compensation of US$5.5m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$600k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$1.6m.

It would therefore appear that Fortuna Silver Mines Inc. pays Jorge A. Ganoza Durant 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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Fortuna Silver Mines, below.

TSX:FVI CEO Compensation, January 1st 2020

Is Fortuna Silver Mines Inc. Growing?

On average over the last three years, Fortuna Silver Mines Inc. has grown earnings per share (EPS) by 4.9% each year (using a line of best fit). It saw its revenue drop 11% over the last year.

I would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has Fortuna Silver Mines Inc. Been A Good Investment?

With a three year total loss of 35%, Fortuna Silver Mines Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Fortuna Silver Mines Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Fortuna Silver Mines (free visualization of insider trades).

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.