Stock Analysis

Here's Why Shareholders May Want To Be Cautious With Increasing Shanta Gold Limited's (LON:SHG) CEO Pay Packet

AIM:SHG
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CEO Eric Zurrin has done a decent job of delivering relatively good performance at Shanta Gold Limited (LON:SHG) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 24 March 2021. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Shanta Gold

How Does Total Compensation For Eric Zurrin Compare With Other Companies In The Industry?

According to our data, Shanta Gold Limited has a market capitalization of UK£137m, and paid its CEO total annual compensation worth US$1.2m over the year to December 2020. That's a notable increase of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$408k.

In comparison with other companies in the industry with market capitalizations ranging from UK£72m to UK£288m, the reported median CEO total compensation was US$673k. This suggests that Eric Zurrin is paid more than the median for the industry. Furthermore, Eric Zurrin directly owns UK£1.8m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$408k US$384k 34%
Other US$776k US$653k 66%
Total CompensationUS$1.2m US$1.0m100%

On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. It's interesting to note that Shanta Gold 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.

ceo-compensation
AIM:SHG CEO Compensation March 18th 2021

Shanta Gold Limited's Growth

Shanta Gold Limited has seen its earnings per share (EPS) increase by 49% a year over the past three years. It achieved revenue growth of 31% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Shanta Gold Limited Been A Good Investment?

Most shareholders would probably be pleased with Shanta Gold Limited for providing a total return of 162% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Shanta Gold that you should be aware of before investing.

Important note: Shanta Gold 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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