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Is Guardian Capital Group Limited (TSE:GCG.A) Overpaying Its CEO?

Simply Wall St

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George Mavroudis became the CEO of Guardian Capital Group Limited (TSE:GCG.A) in 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Guardian Capital Group

How Does George Mavroudis's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Guardian Capital Group Limited has a market cap of CA$607m, and is paying total annual CEO compensation of CA$2.5m. (This figure is for the year to December 2018). That's a modest increase of 6.8% on the prior year year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$500k. We looked at a group of companies with market capitalizations from CA$265m to CA$1.1b, and the median CEO total compensation was CA$1.4m.

Thus we can conclude that George Mavroudis receives more in total compensation than the median of a group of companies in the same market, and of similar size to Guardian Capital Group Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Guardian Capital Group has changed from year to year.

TSX:GCG.A CEO Compensation, June 12th 2019

Is Guardian Capital Group Limited Growing?

Over the last three years Guardian Capital Group Limited has shrunk its earnings per share by an average of 6.7% per year (measured with a line of best fit). In the last year, its revenue is up 13%.

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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Guardian Capital Group Limited Been A Good Investment?

Guardian Capital Group Limited has served shareholders reasonably well, with a total return of 22% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared the total CEO remuneration paid by Guardian Capital Group Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

And shareholder returns are decent but not great. So we think more research is needed, but we don't think the CEO underpaid. Whatever your view on compensation, you might want to check if insiders are buying or selling Guardian Capital Group shares (free trial).

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.

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.