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  "documentTitle": "Dollarama Inc. (DOL)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2018-10-31 00:00:00",
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  "pageNumber": 42,
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  "notes": "The slide highlights a conflict of interest where management decisions (like purchasing warehouses) artificially boost EBITDA to trigger higher bonus payouts.",
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      "text": "This gives management a strong incentive to be inefficient users of capital, as any dollar shifted from operating expense to capex has a direct benefit to key executives.",
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      "text": "EBITDA growth: 181.0%",
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      "text": "The following table describes the key thresholds of the sliding scale used to establish Bonuses to which the Executive Chairman, CEO, CFO and COO were entitled for the fiscal year ended January 28, 2018, based on the percentage of EBITDA growth compared to the fiscal year ended January 29, 2017. The sliding scale is not capped, and the EBITDA growth percentage thresholds remain unchanged from the previous fiscal year.",
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      "text": "The EBITDA for the fiscal year ended January 28, 2018 grew 17.5% compared to the previous fiscal year. Consequently, the Executive Chairman, CEO, CFO and COO received Bonuses representing 181.0% of their respective Target Bonus. See “Compensation Components Summary Compensation Table” for annual bonuses awarded to each individual. In comparison, for the fiscal year ended January 29, 2017, the EBITDA grew 17.7% compared to the previous fiscal year. Consequently, NEOs received Bonuses representing 184.0% of their respective Target Bonus.",
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      "text": "Our earlier concerns about EBITDA quality are amplified by the fact that Dollarama executives are compensated based on seemingly arbitrary and inflated EBITDA targets. This gives management a strong incentive to be inefficient users of capital, as any dollar shifted from operating expense to capex has a direct benefit to key executives.",
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      "text": "For example, note that management's perhaps questionable decision to purchase one of its Montreal warehouses will shift what was until recently rent expense into depreciation. This change in the accounting treatment of Dollarama's tenancy costs will provide a windfall to EBITDA, potentially boosting management bonuses.",
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      "text": "Source: Dollarama Proxy Circular, p. 30",
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      "text": "Year-Over-Year EBITDA Growth vs Payout as % of Target Bonus",
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      "text": "Insiders Incentivized To Grow EBITDA",
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