In 2008 Nolan Watson was appointed CEO of Sandstorm Gold Ltd. (TSE:SSL). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Nolan Watson's Compensation Compare With Similar Sized Companies?
According to our data, Sandstorm Gold Ltd. has a market capitalization of CA$1.4b, and paid its CEO total annual compensation worth US$2.3m over the year to December 2019. Notably, that's an increase of 26% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$317k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$1.6m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Sandstorm Gold stands. On an industry level, roughly 92% of total compensation represents salary and 7.6% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Sandstorm Gold, in sharp contrast to the overall sector.
Thus we can conclude that Nolan Watson receives more in total compensation than the median of a group of companies in the same market, and of similar size to Sandstorm Gold Ltd.. However, this doesn't necessarily mean the pay 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, below, how CEO compensation at Sandstorm Gold has changed over time.
Is Sandstorm Gold Ltd. Growing?
Sandstorm Gold Ltd. has reduced its earnings per share by an average of 31% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 22% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. 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 earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Sandstorm Gold Ltd. Been A Good Investment?
I think that the total shareholder return of 46%, over three years, would leave most Sandstorm Gold Ltd. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at Sandstorm Gold Ltd. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Shifting gears from CEO pay for a second, we've picked out 3 warning signs for Sandstorm Gold that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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