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Here are some highlights from our inaugural report: Outliers


In our inaugural research piece, we decided to investigate how well aligned the CEO and Chairperson are with their shareholders. CEOs and the Company Chair are arguably the two most important people in any company, given that jointly they are responsible for day-to-day operations, key capital allocation decisions, and broader corporate governance. SGC decided to focus its initial report on the following companies, which are covered by ISS and were chosen by market cap size.


Across many industries, shareholders have continually asked for higher levels of alignment from senior management and boards. The reason is simple- by having similar financial incentives as the equity owners, management teams and boards are incentivized to make decisions to maximize the corporation’s per-share value. The analytical findings of this report justify shareholder demands for those calls for more alignment.

Over the last 5 years, the GDX index has fallen by 17% amidst an 8% decline in gold prices. However, within the universe of companies that this report focused on, there were clear outliers in terms of total shareholder return. The three best performing companies were Northern Star, Evolution, and Kirkland Lake, which returned 869%, 267% and 256%, respectively. Returns of this magnitude indicate that there are companies that truly add shareholder value regardless of the gold price. Investors looking for opportunities such as these ultimately have to make a decision to invest in the right leadership.

We do not think it is coincidental that the best performing companies have leaders that own substantial amounts of common stock relative to their level of compensation. The results in this piece indicated that there is a clear and meaningful relationship between shareholder return and levels of stock ownership between CEOs and Chairpersons. It is precisely the outliers - such as Northern Star, Kirkland Lake, Evolution and Franco-Nevada – where the leaders have invested meaningful sums of their personal wealth in common shares which demonstrate the ability for the gold industry to create long-term shareholder value.

For investors, finding companies where company leadership invests alongside them is a key factor in making investment decisions. Shareholders are more than willing to share the risk and reward alongside those who are responsible for protecting shareholder interests and making key decisions. We believe that the entire industry could improve returns on an aggregate basis by aligning itself more directly with stock holders, as equal owners of the companies.