Shareholders May Be Wary Of Increasing Afcon Holdings Ltd's (TLV:AFHL) CEO Compensation Package

Key Insights

• Afcon Holdings' Annual General Meeting to take place on 31st of December
• Salary of ₪1.63m is part of CEO David Hareli's total remuneration
• The total compensation is similar to the average for the industry
• Afcon Holdings' three-year loss to shareholders was 7.5% while its EPS was down 48% over the past three years

Afcon Holdings Ltd (TLV:AFHL) has not performed well recently and CEO David Hareli will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 31st of December. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Afcon Holdings

How Does Total Compensation For David Hareli Compare With Other Companies In The Industry?

Our data indicates that Afcon Holdings Ltd has a market capitalization of ₪930m, and total annual CEO compensation was reported as ₪2.1m for the year to December 2023. That's a fairly small increase of 6.8% over the previous year. In particular, the salary of ₪1.63m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Israel Construction industry with market capitalizations between ₪365m and ₪1.5b, we discovered that the median CEO total compensation of that group was ₪2.2m. So it looks like Afcon Holdings compensates David Hareli in line with the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	₪1.6m	₪1.6m	76%
Other	₪511k	₪446k	24%
Total Compensation	₪2.1m	₪2.0m	100%

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. It's interesting to note that Afcon Holdings pays out a greater portion of remuneration through salary, compared to the 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.

A Look at Afcon Holdings Ltd's Growth Numbers

Afcon Holdings Ltd has reduced its earnings per share by 48% a year over the last three years. Its revenue is down 17% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Afcon Holdings Ltd Been A Good Investment?

With a three year total loss of 7.5% for the shareholders, Afcon Holdings Ltd would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in Afcon Holdings we think you should know about.

Important note: Afcon Holdings 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.