Is Teranga Gold Corporation's (TSE:TGZ) CEO Salary Justified?
Richard Young became the CEO of Teranga Gold Corporation (TSE:TGZ) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Teranga Gold
How Does Richard Young's Compensation Compare With Similar Sized Companies?
According to our data, Teranga Gold Corporation has a market capitalization of CA$863m, and paid its CEO total annual compensation worth US$1.8m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$502k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.2m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Teranga Gold. Speaking on an industry level, we can see that nearly 92% of total compensation represents salary, while the remainder of 7.6% is other remuneration. Readers will want to know that Teranga Gold pays a modest slice of remuneration through salary, as compared to the wider sector.
It would therefore appear that Teranga Gold Corporation pays Richard Young more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. 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 Teranga Gold has changed over time.
Is Teranga Gold Corporation Growing?
Teranga Gold Corporation has reduced its earnings per share by an average of 81% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 13%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Teranga Gold Corporation Been A Good Investment?
With a total shareholder return of 24% over three years, Teranga Gold Corporation shareholders would, in general, be reasonably content. 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 total CEO remuneration at Teranga Gold Corporation with the amount paid at companies with a similar market capitalization. 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 to impress us, over the last three years. While shareholder returns are acceptable, they don't delight. So you may want to delve deeper, because we don't think the CEO pay is too low. On another note, we've spotted 1 warning sign for Teranga Gold that investors should look into moving forward.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
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