What has been the trend in GNT’s earnings?Performance can be measured based on factors such as earnings and total shareholder return (TSR). I believe earnings is a cleaner proxy, since many factors can impact share price, and therefore, TSR. Most recently, GNT delivered negative earnings of -US$229.99K , which is a further decline from prior year’s loss of -US$221.86K. Additionally, on average, GNT has been loss-making in the past, with a 5-year average EPS of -US$0.29. During times of unprofitability the company may be incurring a period of reinvestment and growth, or it can be a sign of some headwind. In any event, CEO compensation should echo the current condition of the business. In the most recent financial statments, Kondrat’s total remuneration declined by a marginal -4.37%, to US$128.85K.
Is GNT’s CEO overpaid relative to the market?
Though one size does not fit all, as compensation should account for specific factors of the company and market, we can gauge a high-level base line to see if GNT is an outlier. This outcome helps investors ask the right question about Kondrat’s incentive alignment. On average, a Canadian small-cap has a value of $345M, generates earnings of $24M, and remunerates its CEO at roughly $770,000 per year. Typically I’d use market cap and profit as factors determining performance, however, GNT’s negative earnings lower the usefulness of my formula. Analyzing the range of remuneration for small-cap executives, it seems like Kondrat is being paid within the bounds of reasonableness. Putting everything together, even though GNT is unprofitable, it seems like the CEO’s pay is sound.
My conclusion is that Kondrat is not being overpaid. But your role as a shareholder should not end here. As above, this is a relatively simplistic calculation using high-level benchmarket. Proactive shareholders should question their representatives (i.e. the board of directors) how they think about the CEO’s incentive alignment with shareholders and how they balance this with retention and reward. If you have not done so already, I urge you to complete your research by taking a look at the following:
- 1. Governance: To find out more about GNT’s governance, look through our infographic report of the company’s board and management.
- 2. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- 3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GNT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!