It's Unlikely That Gran Colombia Gold Corp.'s (TSE:GCM) CEO Will See A Huge Pay Rise This Year

Despite strong share price growth of 69% for Gran Colombia Gold Corp. (TSE:GCM) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 27 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Gran Colombia Gold

Comparing Gran Colombia Gold Corp.'s CEO Compensation With the industry

At the time of writing, our data shows that Gran Colombia Gold Corp. has a market capitalization of CA$335m, and reported total annual CEO compensation of US$889k for the year to December 2020. That's a notable increase of 19% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$388k.

On examining similar-sized companies in the industry with market capitalizations between CA$121m and CA$483m, we discovered that the median CEO total compensation of that group was US$378k. Hence, we can conclude that Lombardo Paredes-Arenas is remunerated higher than the industry median.

Speaking on an industry level, nearly 94% of total compensation represents salary, while the remainder of 6% is other remuneration. Gran Colombia Gold pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Gran Colombia Gold Corp.'s Growth

Gran Colombia Gold Corp. has reduced its earnings per share by 9.2% a year over the last three years. Its revenue is up 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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 EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Gran Colombia Gold Corp. Been A Good Investment?

Boasting a total shareholder return of 69% over three years, Gran Colombia Gold Corp. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is concerning) in Gran Colombia Gold we think you should know about.

Switching gears from Gran Colombia Gold, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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