We Think The Compensation For Elspec Engineering Ltd's (TLV:ELSPC) CEO Looks About Right

Key Insights

• Elspec Engineering will host its Annual General Meeting on 15th of October
• CEO Yoram Harary's total compensation includes salary of ₪1.20m
• Total compensation is similar to the industry average
• Elspec Engineering's EPS grew by 6.9% over the past three years while total shareholder return over the past three years was 43%

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Performance at Elspec Engineering Ltd (TLV:ELSPC) has been reasonably good and CEO Yoram Harary has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 15th of October, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

Check out our latest analysis for Elspec Engineering

Comparing Elspec Engineering Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that Elspec Engineering Ltd has a market capitalization of ₪92m, and reported total annual CEO compensation of ₪1.7m for the year to December 2024. That's a fairly small increase of 6.2% over the previous year. Notably, the salary which is ₪1.20m, represents most of the total compensation being paid.

For comparison, other companies in the Israel Electrical industry with market capitalizations below ₪656m, reported a median total CEO compensation of ₪1.3m. From this we gather that Yoram Harary is paid around the median for CEOs in the industry. What's more, Yoram Harary holds ₪51m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 78% of total compensation out of all the companies we analyzed, while other remuneration made up 22% of the pie. There isn't a significant difference between Elspec Engineering and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Elspec Engineering Ltd's Growth

Over the past three years, Elspec Engineering Ltd has seen its earnings per share (EPS) grow by 6.9% per year. In the last year, its revenue is down 1.6%.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Elspec Engineering Ltd Been A Good Investment?

We think that the total shareholder return of 43%, over three years, would leave most Elspec Engineering Ltd shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Elspec Engineering that investors should think about before committing capital to this stock.

Switching gears from Elspec Engineering, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.