We Think Shareholders May Want To Consider A Review Of Electra Limited's (TLV:ELTR) CEO Compensation Package

Key Insights

• Electra will host its Annual General Meeting on 22nd of November
• Salary of ₪3.21m is part of CEO Itamar Deutscher's total remuneration
• Total compensation is 951% above industry average
• Over the past three years, Electra's EPS fell by 0.04% and over the past three years, the total loss to shareholders 7.6%

The results at Electra Limited (TLV:ELTR) have been quite disappointing recently and CEO Itamar Deutscher bears some responsibility for this. At the upcoming AGM on 22nd of November, shareholders can hear from the board including their plans for turning around performance. 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 Electra

How Does Total Compensation For Itamar Deutscher Compare With Other Companies In The Industry?

According to our data, Electra Limited has a market capitalization of ₪5.2b, and paid its CEO total annual compensation worth ₪12m over the year to December 2022. We note that's a small decrease of 8.0% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₪3.2m.

On comparing similar companies from the Israel Construction industry with market caps ranging from ₪3.8b to ₪12b, we found that the median CEO total compensation was ₪1.1m. Accordingly, our analysis reveals that Electra Limited pays Itamar Deutscher north of the industry median. Moreover, Itamar Deutscher also holds ₪12m worth of Electra stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₪3.2m	₪3.1m	28%
Other	₪8.4m	₪9.5m	72%
Total Compensation	₪12m	₪13m	100%

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. Electra pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Electra Limited's Growth Numbers

Electra Limited saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is up 15%.

A lack of EPS improvement is not good to see. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Electra Limited Been A Good Investment?

Given the total shareholder loss of 7.6% over three years, many shareholders in Electra Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Electra (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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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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.