Shareholders of Soma Gold Corp. (CVE:SOMA) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 16 December 2022. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing Soma Gold Corp.'s CEO Compensation With The Industry
Our data indicates that Soma Gold Corp. has a market capitalization of CA$25m, and total annual CEO compensation was reported as CA$516k for the year to December 2021. Notably, that's an increase of 55% over the year before. Notably, the salary which is CA$391.1k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below CA$272m, we found that the median total CEO compensation was CA$180k. This suggests that Javier F. Unda is paid more than the median for the industry.
On an industry level, roughly 88% of total compensation represents salary and 12% is other remuneration. Soma Gold pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Soma Gold Corp.'s Growth
Soma Gold Corp.'s earnings per share (EPS) grew 105% per year over the last three years. Its revenue is up 26% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Soma Gold Corp. Been A Good Investment?
The return of -79% over three years would not have pleased Soma Gold Corp. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Soma Gold you should be aware of, and 2 of them are concerning.
Important note: Soma Gold is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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