Shareholders Will Probably Hold Off On Increasing Avrot Industries Ltd's (TLV:AVRT) CEO Compensation For The Time Being

Key Insights

• Avrot Industries' Annual General Meeting to take place on 4th of November
• Salary of ₪787.8k is part of CEO Alex Kagan's total remuneration
• Total compensation is 202% above industry average
• Avrot Industries' three-year loss to shareholders was 12% while its EPS grew by 138% over the past three years

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In the past three years, the share price of Avrot Industries Ltd (TLV:AVRT) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 4th of November. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Avrot Industries

How Does Total Compensation For Alex Kagan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Avrot Industries Ltd has a market capitalization of ₪232m, and reported total annual CEO compensation of ₪892k for the year to December 2024. That's a notable increase of 35% on last year. Notably, the salary which is ₪787.8k, represents most of the total compensation being paid.

For comparison, other companies in the Israel Commercial Services industry with market capitalizations below ₪651m, reported a median total CEO compensation of ₪296k. Accordingly, our analysis reveals that Avrot Industries Ltd pays Alex Kagan north of the industry median.

On an industry level, roughly 54% of total compensation represents salary and 46% is other remuneration. It's interesting to note that Avrot Industries pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Avrot Industries Ltd's Growth Numbers

Over the past three years, Avrot Industries Ltd has seen its earnings per share (EPS) grow by 138% per year. Revenue was pretty flat on last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Avrot Industries Ltd Been A Good Investment?

With a three year total loss of 12% for the shareholders, Avrot Industries Ltd would certainly have some dissatisfied shareholders. 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 stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Avrot Industries (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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.