In the past three years, shareholders of Fortuna Silver Mines Inc. (TSE:FVI) have seen a loss on their investment. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 28 June 2021 will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

See our latest analysis for Fortuna Silver Mines

How Does Total Compensation For Jorge A. Ganoza Durant Compare With Other Companies In The Industry?

According to our data, Fortuna Silver Mines Inc. has a market capitalization of CA$1.3b, and paid its CEO total annual compensation worth US$2.5m over the year to December 2020. That's a slight decrease of 4.9% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$618k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$495m and CA$2.0b had a median total CEO compensation of US$1.1m. Accordingly, our analysis reveals that Fortuna Silver Mines Inc. pays Jorge A. Ganoza Durant north of the industry median. Moreover, Jorge A. Ganoza Durant also holds CA$11m worth of Fortuna Silver Mines stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 92% of total compensation represents salary and 8% is other remuneration. Fortuna Silver Mines sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Fortuna Silver Mines Inc.'s Growth Numbers

Over the last three years, Fortuna Silver Mines Inc. has shrunk its earnings per share by 12% per year. Its revenue is up 42% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Fortuna Silver Mines Inc. Been A Good Investment?

With a three year total loss of 4.0% for the shareholders, Fortuna Silver Mines Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Fortuna Silver Mines we think you should know about.

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.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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