We Discuss Why Electra Consumer Products (1970) Ltd's (TLV:ECP) CEO Compensation May Be Closely Reviewed

Key Insights

• Electra Consumer Products (1970) will host its Annual General Meeting on 1st of January
• CEO Zvika Schwimmer's total compensation includes salary of ₪1.48m
• Total compensation is 436% above industry average
• Electra Consumer Products (1970)'s EPS declined by 88% over the past three years while total shareholder loss over the past three years was 39%

Shareholders will probably not be too impressed with the underwhelming results at Electra Consumer Products (1970) Ltd (TLV:ECP) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 1st of January. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Electra Consumer Products (1970)

Comparing Electra Consumer Products (1970) Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that Electra Consumer Products (1970) Ltd has a market capitalization of ₪2.2b, and reported total annual CEO compensation of ₪3.7m for the year to December 2023. We note that's a decrease of 36% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₪1.5m.

On examining similar-sized companies in the Israel Consumer Durables industry with market capitalizations between ₪1.5b and ₪5.8b, we discovered that the median CEO total compensation of that group was ₪699k. This suggests that Zvika Schwimmer is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	₪1.5m	₪2.1m	39%
Other	₪2.3m	₪3.8m	61%
Total Compensation	₪3.7m	₪5.9m	100%

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. Electra Consumer Products (1970) 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.

Electra Consumer Products (1970) Ltd's Growth

Over the last three years, Electra Consumer Products (1970) Ltd has shrunk its earnings per share by 88% per year. In the last year, its revenue is up 14%.

The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Electra Consumer Products (1970) Ltd Been A Good Investment?

Few Electra Consumer Products (1970) Ltd shareholders would feel satisfied with the return of -39% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Electra Consumer Products (1970) (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Electra Consumer Products (1970), 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.