Yahoo Finance It's Unlikely That Golden Entertainment, Inc.'s (NASDAQ:GDEN) CEO Will See A Huge Pay Rise This Year
The share price of Golden Entertainment, Inc. (NASDAQ:GDEN) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 04 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Check out our latest analysis for Golden Entertainment
Comparing Golden Entertainment, Inc.'s CEO Compensation With the industry
According to our data, Golden Entertainment, Inc. has a market capitalization of US$1.2b, and paid its CEO total annual compensation worth US$5.2m over the year to December 2020. That's just a smallish increase of 5.9% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.6m. Accordingly, our analysis reveals that Golden Entertainment, Inc. pays Blake Sartini north of the industry median. What's more, Blake Sartini holds US$5.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.0m | US$1.0m | 20% |
Other | US$4.2m | US$3.9m | 80% |
Total Compensation | US$5.2m | US$4.9m | 100% |
On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Although there is a difference in how total compensation is set, Golden Entertainment more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Golden Entertainment, Inc.'s Growth
Over the last three years, Golden Entertainment, Inc. has shrunk its earnings per share by 78% per year. It saw its revenue drop 23% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Golden Entertainment, Inc. Been A Good Investment?
Boasting a total shareholder return of 39% over three years, Golden Entertainment, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Golden Entertainment that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
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