Does Gem Diamonds' (LON:GEMD) CEO Salary Compare Well With Industry Peers?

The CEO of Gem Diamonds Limited (LON:GEMD) is Clifford Elphick, and this article examines the executive's compensation against the backdrop of overall company performance. 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 Gem Diamonds

How Does Total Compensation For Clifford Elphick Compare With Other Companies In The Industry?

Our data indicates that Gem Diamonds Limited has a market capitalization of UK£63m, and total annual CEO compensation was reported as UK£1.2m for the year to December 2019. That's a slightly lower by 4.7% over the previous year. Notably, the salary which is US$634.1k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below UK£148m, reported a median total CEO compensation of UK£145k. Accordingly, our analysis reveals that Gem Diamonds Limited pays Clifford Elphick north of the industry median.

Talking in terms of the industry, salary represented approximately 65% of total compensation out of all the companies we analyzed, while other remuneration made up 35% of the pie. In Gem Diamonds' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Gem Diamonds Limited's Growth

Gem Diamonds Limited has seen its earnings per share (EPS) increase by 81% a year over the past three years. It saw its revenue drop 16% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 Gem Diamonds Limited Been A Good Investment?

With a three year total loss of 40% for the shareholders, Gem Diamonds Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Clifford is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Clifford is underpaid, in fact compensation is definitely on the higher side.

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 4 warning signs for Gem Diamonds that investors should look into moving forward.

Switching gears from Gem Diamonds, 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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