Should Shareholders Reconsider Gran Tierra Energy Inc.'s (NYSEMKT:GTE) CEO Compensation Package?

By
Simply Wall St
Published
April 29, 2021
NYSEAM:GTE
Source: Shutterstock

Gran Tierra Energy Inc. (NYSEMKT:GTE) has not performed well recently and CEO Greg Guidry will probably need to up their game. At the upcoming AGM on 05 May 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Gran Tierra Energy

How Does Total Compensation For Greg Guidry Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gran Tierra Energy Inc. has a market capitalization of US$253m, and reported total annual CEO compensation of US$2.4m for the year to December 2020. Notably, that's an increase of 10% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$432k.

For comparison, other companies in the same industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$1.2m. This suggests that Greg Guidry is paid more than the median for the industry. Moreover, Greg Guidry also holds US$2.6m worth of Gran Tierra Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$432k US$462k 18%
Other US$2.0m US$1.7m 82%
Total CompensationUS$2.4m US$2.2m100%

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. Gran Tierra Energy sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
AMEX:GTE CEO Compensation April 29th 2021

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 118% per year. Its revenue is down 58% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Gran Tierra Energy Inc. Been A Good Investment?

With a total shareholder return of -80% over three years, Gran Tierra Energy Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Gran Tierra Energy (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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