Dave Harper is the CEO of Geodrill Limited (TSE:GEO), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Geodrill
Comparing Geodrill Limited's CEO Compensation With the industry
Our data indicates that Geodrill Limited has a market capitalization of CA$71m, and total annual CEO compensation was reported as US$1.4m for the year to December 2019. Notably, that's an increase of 24% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$425k.
For comparison, other companies in the industry with market capitalizations below CA$254m, reported a median total CEO compensation of US$120k. Hence, we can conclude that Dave Harper is remunerated higher than the industry median. Moreover, Dave Harper also holds CA$28m worth of Geodrill stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$425k | US$425k | 31% |
| Other | US$931k | US$665k | 69% |
| Total Compensation | US$1.4m | US$1.1m | 100% |
On an industry level, roughly 91% of total compensation represents salary and 9.3% is other remuneration. It's interesting to note that Geodrill allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Geodrill Limited's Growth
Over the last three years, Geodrill Limited has shrunk its earnings per share by 11% per year. It saw its revenue drop 17% over the last year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. 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 Geodrill Limited Been A Good Investment?
With a three year total loss of 23% for the shareholders, Geodrill Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we touched on above, Geodrill Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Geodrill that investors should look into moving forward.
Important note: Geodrill is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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About TSX:GEO
Geodrill
Provides mineral exploration drilling services to mining companies in West Africa, Egypt, Chile, and Peru.
Undervalued with excellent balance sheet.
