Shareholders May Be More Conservative With Gencell Ltd's (TLV:GNCL) CEO Compensation For Now

Key Insights

• Gencell's Annual General Meeting to take place on 25th of July
• Salary of US$396.0k is part of CEO Rami Reshef's total remuneration
• Total compensation is 76% above industry average
• Gencell's three-year loss to shareholders was 95% while its EPS grew by 31% over the past three years

In the past three years, the share price of Gencell Ltd (TLV:GNCL) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 25th of July. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Gencell

How Does Total Compensation For Rami Reshef Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gencell Ltd has a market capitalization of ₪70m, and reported total annual CEO compensation of US$616k for the year to December 2023. That's a notable decrease of 36% on last year. We note that the salary portion, which stands at US$396.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Israel Electrical industry with market capitalizations under ₪730m, the reported median total CEO compensation was US$351k. Hence, we can conclude that Rami Reshef is remunerated higher than the industry median. Furthermore, Rami Reshef directly owns ₪3.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$396k	US$407k	64%
Other	US$221k	US$553k	36%
Total Compensation	US$616k	US$960k	100%

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. There isn't a significant difference between Gencell and the broader market, in terms of salary allocation in the overall compensation package. 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 Gencell Ltd's Growth Numbers

Over the past three years, Gencell Ltd has seen its earnings per share (EPS) grow by 31% per year. It saw its revenue drop 34% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Gencell Ltd Been A Good Investment?

With a total shareholder return of -95% over three years, Gencell Ltd shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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. That's why we did our research, and identified 4 warning signs for Gencell (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Important note: Gencell 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com