Junior Gold Miners Executive Compensation 2020 Review

As I continue my research on the gold and silver producers, I wanted to understand their leadership better. I reviewed how each CEO had performed when I looked at the junior gold producer’s comparative historical returns. Now, I’m taking a look at the entire executive team and their compensation.

When companies report their compensation in the annual financial statements, the IFRS (International Financial Reporting Standards) presents requirements for who they have to report compensation for. Here’s a quote from the IFRS Standards on who the company needs to report on.

A person having control or joint control of the reporting entity (or his close family member) has significant influence over the entity in question or is a member of the key management personnel of this entity (or of a parent of this entity).

Who is considered key management personnel?

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity (IAS 24.9)

Although these definitions are specific when it comes to directors, they aren’t specific when it comes to those in or near the C-suite. However, my hope is that when it comes to these companies, we are somewhat near an apples-to-apples comparison of their executive compensation. If you want to look up a company’s general compensation plan yourself, it is usually in a section of their annual report with the title heading “Related Party.” More detailed information is usually found in a “DEF 14A proxy statement.”

Most companies break out their compensation between share-based compensation and salaried compensation. But not every company reports it the same, so rather than try to guess where to split share-based compensation and salaried compensation, I just used total compensation.

Source: Each company’s 2019 annual financial statement

Here were the highest-paid executive teams of 2019 among these ten companies.

  1. SSR Mining (SSRM)
  2. Eldorado Gold (EGO)
  3. B2Gold (BTG)
  4. Hecla Mining (HL)

Source: Each company’s 2019 annual financial statement

I recorded compensation going back to 2017 to see if there were any dramatic fluctuations in executive compensation. It turns out there was not. Although the order changed, there was no difference in the top four companies with the highest compensation.

  1. Eldorado Gold
  2. B2Gold
  3. Hecla Mining
  4. SSR Mining

Source: Each company’s 2019 annual financial statement and Yahoo Finance for the market cap

Compensation on its own is only somewhat informative. Next, I break down compensation according to a few metrics of my own creation. The first is dividing each company’s market cap by 2019 total compensation. This will inform us that for every dollar of compensation, how much market capitalization does a company have. The higher the number, the better.

  1. Equinox Gold (EQX)
  2. Harmony Gold (HMY)
  3. B2Gold
  4. NovaGold (NG)

Source: Each company’s 2019 annual financial statement and Yahoo Finance for revenue

Next, we divide each company’s total 2019 revenue by total 2019 executive compensation. The result will inform us of how much revenue each company generates per dollar spent on executive compensation. The higher the number, the better.

  2. B2Gold
  3. Equinox Gold
  4. Alamos Gold (AGI)

NovaGold and Seabridge Gold didn’t produce any revenue during 2019, according to Yahoo Finance.

Source: Each company’s 2019 annual financial statement and Yahoo Finance for operating cash flow

Next, we used the same method but replaced revenue with operating cash flow. We are dividing the operating cash flow by 2019 compensation to tell us how much operating cash flow was generated per dollar spent on executive compensation. The higher the number, the better.

  2. B2Gold
  3. Alamos Gold
  4. Equinox Gold

Source: Each company’s 2019 annual financial statement and Yahoo Finance for share prices

Since the executive team is working for shareholders, I decided to measure one-year total returns against each executive team’s compensation. I measured the 1-year total return from the opening price of January 2019 to the opening price of January 2020. This chart signifies how much executive compensation was paid per 1 percentage point of total return during 2019. The lower the number, the better.

  1. Equinox Gold
  2. Harmony Gold
  3. NovaGold
  4. Eldorado Gold

Eldorado Gold started the 2019 year trading at $2.87 and finished at $8.16. Therefore, even though compensation is high relative to its peers, it still managed to be the number 4 ranked company by this metric.

Source: Each company 2019 annual financial statement and Yahoo Finance for share prices

I also like to look at metrics over the longer term, so here’s the same metric measured over a three-year period. This metric looks at total compensation from 2017 to 2019 divided by the total return during the same period. It again indicates how much compensation was paid per percentage point of total return. The lower the number, the better.

  1. Harmony Gold
  2. NovaGold
  3. SSR Mining
  4. Seabridge Gold

Equinox Gold didn’t have price data going back past 2018 as it had a merger that adjusted prices. The other companies that don’t have bars in the bar chart had negative total returns during the three-year period, so I didn’t include them. I used opening prices from January 2017 to January 2020 to calculate a three-year total return.

Source: Bloomberg

Just for reference, I created the above chart in my last analysis of junior gold miners. I thought it would be useful to put into context how long each CEO has been with each company.

Thoughts on Executive Compensation

I just wanted to share two different thoughts on executive compensation after pouring through these various financial statements.

One, I was amazed at how many executive bonuses were set up to pay out even if executives didn’t reach their goals. This is to say that many bonuses partially paid out even if executive teams only partially reached their goal. To me, this is like giving kids a participation trophy at the soccer tournament when they didn’t finish in the top three. I wouldn’t have expected companies to operate this way.

And second, as I read through some proxy reports, many companies would attempt to justify their executive compensation plans by merely comparing it to what other companies pay their CEOs. As I see it, directors and C-suite executives are usually the ones who have most of the voting power to keep directors. And directors are the ones who structure compensation plans for C-suite execs. It seems like a potential “you scratch my back and I’ll scratch yours” kind of situation. Therefore, naturally, executive compensation is going to go up continuously. This means comparing compensation between companies is not a proper methodology when determining what to pay executives. Why not make executive compensation truly merit-based? Or, if you want to compare yourself to other companies, then why not compare returns to shareholders between companies to determine pay?

Some companies do better than others, but some of these compensation plans seem to overdo it based on what shareholders are getting in return. (A bit of an understatement)


Executive compensation can be a hot button issue. There’s no doubt that there are some companies in this group with expensive executive compensation plans. Here are my takeaways from this exercise:

  1. Equinox Gold and Harmony Gold appear to have the most reasonable executive compensation plans.
  2. B2Gold’s is not bad either, considering it’s a larger company with more diverse jurisdictions.
  3. IAMGOLD has a more shareholder-friendly compensation plan when compared to revenue and operating cash flow. However, the shares have underperformed relative to others. There could be an opportunity there worth looking into.
  4. The companies to avoid stand out like a sore thumb.

I hope this analysis is as helpful for you as it was for me. If you’d like to review my work, you can see that in the spreadsheet link below. If you see something that needs correction, let me know, and I will be happy to update.

Junior Gold Companies Key Personnel Compensation Comparison Spreadsheet

Disclosure: I am/we are long EQX, BTG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Dividends were not factored in the total return numbers of this analysis.

The author of this article is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. The author of this article expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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