Stock Analysis

Does E. Schnapp Works' (TLV:SHNP) CEO Salary Compare Well With The Performance Of The Company?

TASE:SHNP
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This article will reflect on the compensation paid to Uri Rosenshein who has served as CEO of E. Schnapp & Co. Works Ltd (TLV:SHNP) since 1988. This analysis will also assess whether E. Schnapp Works pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for E. Schnapp Works

How Does Total Compensation For Uri Rosenshein Compare With Other Companies In The Industry?

According to our data, E. Schnapp & Co. Works Ltd has a market capitalization of ₪152m, and paid its CEO total annual compensation worth ₪1.9m over the year to December 2019. That's a fairly small increase of 5.3% over the previous year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₪1.9m.

In comparison with other companies in the industry with market capitalizations under ₪663m, the reported median total CEO compensation was ₪395k. Hence, we can conclude that Uri Rosenshein is remunerated higher than the industry median. Moreover, Uri Rosenshein also holds ₪18m worth of E. Schnapp Works stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary ₪1.9m ₪1.8m 100%
Other - - -
Total Compensation₪1.9m ₪1.8m100%

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. At the company level, E. Schnapp Works pays Uri Rosenshein solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
TASE:SHNP CEO Compensation December 1st 2020

E. Schnapp & Co. Works Ltd's Growth

Over the last three years, E. Schnapp & Co. Works Ltd has shrunk its earnings per share by 95% per year. It saw its revenue drop 17% over the last year.

The decline in EPS is a bit concerning. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has E. Schnapp & Co. Works Ltd Been A Good Investment?

With a three year total loss of 58% for the shareholders, E. Schnapp & Co. Works Ltd would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

E. Schnapp Works pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, E. Schnapp & Co. Works Ltd is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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. We identified 3 warning signs for E. Schnapp Works (2 are a bit concerning!) that you should be aware of before investing here.

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.

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