Here's Why Shareholders May Want To Be Cautious With Increasing Inrom Construction Industries Ltd's (TLV:INRM) CEO Pay Packet

Key Insights

• Inrom Construction Industries to hold its Annual General Meeting on 14th of November
• Total pay for CEO Noam Shchalca includes ₪1.38m salary
• The overall pay is 498% above the industry average
• Inrom Construction Industries' EPS grew by 4.7% over the past three years while total shareholder loss over the past three years was 19%

The underwhelming share price performance of Inrom Construction Industries Ltd (TLV:INRM) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 14th of November. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Inrom Construction Industries

Comparing Inrom Construction Industries Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that Inrom Construction Industries Ltd has a market capitalization of ₪1.9b, and reported total annual CEO compensation of ₪3.2m for the year to December 2023. That's a notable increase of 19% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₪1.4m.

For comparison, other companies in the Israel Building industry with market capitalizations ranging between ₪744m and ₪3.0b had a median total CEO compensation of ₪530k. This suggests that Noam Shchalca is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	₪1.4m	₪1.4m	43%
Other	₪1.8m	₪1.2m	57%
Total Compensation	₪3.2m	₪2.7m	100%

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. Inrom Construction Industries pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Inrom Construction Industries Ltd's Growth

Over the past three years, Inrom Construction Industries Ltd has seen its earnings per share (EPS) grow by 4.7% per year. In the last year, its revenue is down 23%.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Inrom Construction Industries Ltd Been A Good Investment?

Since shareholders would have lost about 19% over three years, some Inrom Construction Industries Ltd investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Inrom Construction Industries that you should be aware of before investing.

Switching gears from Inrom Construction Industries, 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.