Gran Tierra Energy Inc. (NYSEMKT:GTE) has not performed well recently and CEO Greg Guidry will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 05 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.
Comparing Gran Tierra Energy Inc.'s CEO Compensation With the industry
According to our data, Gran Tierra Energy Inc. has a market capitalization of US$253m, and paid its CEO total annual compensation worth US$2.4m over the year to December 2020. We note that's an increase of 10% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$432k.
In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$1.2m. Accordingly, our analysis reveals that Gran Tierra Energy Inc. pays Greg Guidry north of the industry median. Furthermore, Greg Guidry directly owns US$2.6m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. Gran Tierra Energy sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Gran Tierra Energy Inc.'s Growth Numbers
Over the last three years, Gran Tierra Energy Inc. has shrunk its earnings per share by 118% per year. Its revenue is down 58% over the previous year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Gran Tierra Energy Inc. Been A Good Investment?
The return of -80% over three years would not have pleased Gran Tierra Energy Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Gran Tierra Energy you should be aware of, and 1 of them is concerning.
Switching gears from Gran Tierra Energy, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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