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Is Golden Entertainment, Inc. (NASDAQ:GDEN) Excessively Paying Its CEO?

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Simply Wall St
·3 min read
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Blake Sartini has been the CEO of Golden Entertainment, Inc. (NASDAQ:GDEN) since 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Golden Entertainment

How Does Blake Sartini's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Golden Entertainment, Inc. has a market cap of US$477m, and reported total annual CEO compensation of US$3.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.7m.

As you can see, Blake Sartini is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Golden Entertainment, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Golden Entertainment has changed over time.

NasdaqGM:GDEN CEO Compensation, February 4th 2020
NasdaqGM:GDEN CEO Compensation, February 4th 2020

Is Golden Entertainment, Inc. Growing?

Golden Entertainment, Inc. has reduced its earnings per share by an average of 124% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 14%.

Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Golden Entertainment, Inc. Been A Good Investment?

I think that the total shareholder return of 60%, over three years, would leave most Golden Entertainment, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We examined the amount Golden Entertainment, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Shareholders may want to check for free if Golden Entertainment insiders are buying or selling shares.

Important note: Golden Entertainment may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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. Thank you for reading.