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Is Argonaut Gold Inc.’s (TSE:AR) CEO Pay Justified?

Ben Rossbaum

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In 2009 Pete Dougherty was appointed CEO of Argonaut Gold Inc. (TSE:AR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Argonaut Gold

How Does Pete Dougherty’s Compensation Compare With Similar Sized Companies?

According to our data, Argonaut Gold Inc. has a market capitalization of CA$343m, and pays its CEO total annual compensation worth US$1.5m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$375k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO compensation was US$614k.

Thus we can conclude that Pete Dougherty receives more in total compensation than the median of a group of companies in the same market, and of similar size to Argonaut Gold Inc.. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Argonaut Gold has changed from year to year.

TSX:AR CEO Compensation, February 21st 2019

Is Argonaut Gold Inc. Growing?

Argonaut Gold Inc. has increased its earnings per share (EPS) by an average of 101% a year, over the last three years (using a line of best fit). It achieved revenue growth of 22% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Argonaut Gold Inc. Been A Good Investment?

Argonaut Gold Inc. has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Argonaut Gold Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Argonaut Gold.

If you want to buy a stock that is better than Argonaut Gold, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.