We Think Lachish Industries Ltd's (TLV:LHIS) CEO Compensation Looks Fair

Key Insights

• Lachish Industries' Annual General Meeting to take place on 18th of December
• Salary of ₪1.00m is part of CEO Ronen Naamat's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Lachish Industries' EPS grew by 37% and over the past three years, the total shareholder return was 329%

The performance at Lachish Industries Ltd (TLV:LHIS) has been quite strong recently and CEO Ronen Naamat has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 18th of December. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for Lachish Industries

How Does Total Compensation For Ronen Naamat Compare With Other Companies In The Industry?

Our data indicates that Lachish Industries Ltd has a market capitalization of ₪197m, and total annual CEO compensation was reported as ₪1.4m for the year to December 2022. That's a fairly small increase of 6.8% over the previous year. In particular, the salary of ₪1.00m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Israel Machinery industry with market capitalizations under ₪745m, the reported median total CEO compensation was ₪1.6m. So it looks like Lachish Industries compensates Ronen Naamat in line with the median for the industry. Furthermore, Ronen Naamat directly owns ₪8.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	₪1.0m	₪1.0m	71%
Other	₪413k	₪317k	29%
Total Compensation	₪1.4m	₪1.3m	100%

Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. Lachish Industries is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 Lachish Industries Ltd's Growth Numbers

Over the past three years, Lachish Industries Ltd has seen its earnings per share (EPS) grow by 37% per year. It achieved revenue growth of 24% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Lachish Industries Ltd Been A Good Investment?

We think that the total shareholder return of 329%, over three years, would leave most Lachish Industries Ltd shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Lachish Industries that investors should think about before committing capital to this 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.