TSXV:SGX Income Statement Dec 5th 17
More What’s a reasonable CEO compensation? Even though one size does not fit all, since compensation should account for specific factors of the company and market, we can evaluate a high-level thresold to see if SGX is an outlier. This outcome helps investors ask the right question about Lees’s incentive alignment. Typically, a Canadian small-cap is worth around $345M, produces earnings of $24M, and pays its CEO at roughly $770,000 per annum. Typically I would look at market cap and earnings as a proxy for performance, however, SGX’s negative earnings lower the usefulness of my formula. Looking at the range of compensation for small-cap executives, it seems like Lees is paid aptly compared to those in similar-sized companies. Putting everything together, though SGX is loss-making, it seems like the CEO’s pay is fair.
What this means for you: Are you a shareholder? You can breathe easy knowing that shareholder funds aren’t being used to overpay SGX’s CEO. However, on the flipside, you should ask whether Lees is appropriately remunerated on the basis of retention. Its important for shareholders to be active in voting governance decisions, as board members are only representatives of investors’ voices. To find out more about SGX’s governance, look through our infographic report of the company’s board and management.
Are you a potential investor? Board members are the voice of shareholders. Although CEO pay doesn’t necessarily make a big dent in your investment thesis in SGX, proper governance on behalf of your investment should be a key concern. These decisions made by top management and directors flow down into financials which impact returns to investors. To research more about these fundamentals, I recommend you check out our simple infographic report on SGX’s financial metrics.
PS. If you are not interested in Sage Gold anymore, you can use our free platform to see my list of over 50 sustainable companies producing great returns . To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements. The author is an independent contributor and at the time of publication had no position in the stocks mentioned.