How Should Investors React To Gran Tierra Energy's (NYSEMKT:GTE) CEO Pay?

Simply Wall St
August 21, 2020

This article will reflect on the compensation paid to Greg Guidry who has served as CEO of Gran Tierra Energy Inc. (NYSEMKT:GTE) since 2015. This analysis will also assess whether Gran Tierra Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Gran Tierra Energy

Comparing Gran Tierra Energy Inc.'s CEO Compensation With the industry

According to our data, Gran Tierra Energy Inc. has a market capitalization of US$109m, and paid its CEO total annual compensation worth US$2.2m over the year to December 2019. That's a notable increase of 38% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$462k.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$613k. This suggests that Greg Guidry is paid more than the median for the industry. Moreover, Greg Guidry also holds US$1.1m worth of Gran Tierra Energy stock directly under their own name.

Component20192018Proportion (2019)
Salary US$462k US$293k 21%
Other US$1.7m US$1.3m 79%
Total CompensationUS$2.2m US$1.6m100%

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. It's interesting to note that Gran Tierra Energy pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

AMEX:GTE CEO Compensation August 21st 2020

A Look at Gran Tierra Energy Inc.'s Growth Numbers

Over the last three years, Gran Tierra Energy Inc. has shrunk its earnings per share by 27% per year. Its revenue is down 39% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Gran Tierra Energy Inc. Been A Good Investment?

Given the total shareholder loss of 86% over three years, many shareholders in Gran Tierra Energy Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Greg is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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've identified 2 warning signs for Gran Tierra Energy that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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