TSXV:FGC Past Future Earnings Dec 16th 17
What’s a reasonable CEO compensation?
Though one size does not fit all, as remuneration should account for specific factors of the company and market, we can determine a high-level benchmark to see if FGC deviates substantially from its peers. This outcome helps investors ask the right question about Henry’s incentive alignment. Generally, a Canadian small-cap has a value of $345M, creates earnings of $24M, and pays its CEO circa $770,000 annually. Typically I would use earnings and market cap to account for variations in performance, however, FGC’s negative earnings reduces the usefulness of my formula. Analyzing the range of remuneration for small-cap executives, it seems like Henry is remunerated sensibly relative to peers. On the whole, even though FGC is loss-making, it seems like the CEO’s pay is sound.
What this means for you:
Are you a shareholder? Hopefully this article has given you insight on how shareholders should think about FGC’s governance policies such as CEO pay. As an investor, you have the right to understand how the board thinks about management incentives, and also the right to vote for and against substantial CEO pay changes. Governance is a big factor in investing, and I encourage you to dig deeper into those that represent your voice on the board. To find out more about FGC’s governance, look through our infographic report of the company’s board and management.
Are you a potential investor? In order to determine whether or not you should invest in FGC, your thesis should be built on fundamentals. Even though CEO pay isn’t technically a key concern, it could serve as an indication as to how board members align incentives and how they think about setting policies. These issues directly impacts how FGC makes money, and factors impacting your return on investment. To research more about these fundamentals, I recommend you check out our simple infographic report on FGC’s financial metrics.
PS. If you are not interested in Frontline 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.