In the past three years, the share price of Gem Diamonds Limited (LON:GEMD) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 02 June 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Gem Diamonds

How Does Total Compensation For Clifford Elphick Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gem Diamonds Limited has a market capitalization of UK£97m, and reported total annual CEO compensation of US$1.3m for the year to December 2020. That's a notable increase of 10% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$645k.

On comparing similar-sized companies in the industry with market capitalizations below UK£142m, we found that the median total CEO compensation was US$221k. Accordingly, our analysis reveals that Gem Diamonds Limited pays Clifford Elphick north of the industry median.

On an industry level, around 63% of total compensation represents salary and 38% is other remuneration. In Gem Diamonds' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Gem Diamonds Limited's Growth Numbers

Over the past three years, Gem Diamonds Limited has seen its earnings per share (EPS) grow by 45% per year. In the last year, its revenue is up 4.2%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Gem Diamonds Limited Been A Good Investment?

The return of -36% over three years would not have pleased Gem Diamonds Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary…

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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. That's why we did our research, and identified 3 warning signs for Gem Diamonds (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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