Here's Why Utron Ltd's (TLV:UTRN) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• Utron's Annual General Meeting to take place on 28th of October
• CEO Haim Shani's total compensation includes salary of ₪906.0k
• Total compensation is 58% below industry average
• Over the past three years, Utron's EPS grew by 99% and over the past three years, the total loss to shareholders 51%

Performance at Utron Ltd (TLV:UTRN) has been rather uninspiring recently and shareholders may be wondering how CEO Haim Shani plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 28th of October. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Utron

Comparing Utron Ltd's CEO Compensation With The Industry

According to our data, Utron Ltd has a market capitalization of ₪79m, and paid its CEO total annual compensation worth ₪1.0m over the year to December 2023. That's a notable decrease of 14% on last year. In particular, the salary of ₪906.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Israel Commercial Services industry with market capitalizations below ₪754m, we found that the median total CEO compensation was ₪2.5m. In other words, Utron pays its CEO lower than the industry median. Moreover, Haim Shani also holds ₪15m worth of Utron stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. Utron is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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 Utron Ltd's Growth Numbers

Utron Ltd has seen its earnings per share (EPS) increase by 99% a year over the past three years. In the last year, its revenue is down 16%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 Utron Ltd Been A Good Investment?

The return of -51% over three years would not have pleased Utron Ltd shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Utron that investors should look into moving forward.

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.