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How Should Investors React To Eldorado Gold's (TSE:ELD) CEO Pay?

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George Burns has been the CEO of Eldorado Gold Corporation (TSE:ELD) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Eldorado Gold pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Eldorado Gold

Comparing Eldorado Gold Corporation's CEO Compensation With the industry

According to our data, Eldorado Gold Corporation has a market capitalization of CA$2.4b, and paid its CEO total annual compensation worth CA$3.5m over the year to December 2019. That's a notable increase of 21% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$771k.

On examining similar-sized companies in the industry with market capitalizations between CA$1.3b and CA$4.2b, we discovered that the median CEO total compensation of that group was CA$2.2m. Hence, we can conclude that George Burns is remunerated higher than the industry median. Moreover, George Burns also holds CA$3.6m worth of Eldorado Gold stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

CA$771k

CA$733k

22%

Other

CA$2.7m

CA$2.2m

78%

Total Compensation

CA$3.5m

CA$2.9m

100%

Talking in terms of the industry, salary represented approximately 83% of total compensation out of all the companies we analyzed, while other remuneration made up 17% of the pie. Eldorado Gold pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Eldorado Gold Corporation's Growth Numbers

Over the past three years, Eldorado Gold Corporation has seen its earnings per share (EPS) grow by 117% per year. It achieved revenue growth of 92% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Eldorado Gold Corporation Been A Good Investment?

Since shareholders would have lost about 2.2% over three years, some Eldorado Gold Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, George is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think George is earning a very handsome sum.

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. That's why we did some digging and identified 2 warning signs for Eldorado Gold that investors should think about before committing capital to this stock.

Important note: Eldorado Gold is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.