Shareholders Will Most Likely Find Naphtha Israel Petroleum Corp. Ltd.'s (TLV:NFTA) CEO Compensation Acceptable

Key Insights

• Naphtha Israel Petroleum's Annual General Meeting to take place on 31st of December
• Total pay for CEO Eran Lendner includes ₪917.0k salary
• The overall pay is comparable to the industry average
• Over the past three years, Naphtha Israel Petroleum's EPS fell by 3.6% and over the past three years, the total shareholder return was 87%

Despite strong share price growth of 87% for Naphtha Israel Petroleum Corp. Ltd. (TLV:NFTA) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 31st of December. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Naphtha Israel Petroleum

How Does Total Compensation For Eran Lendner Compare With Other Companies In The Industry?

At the time of writing, our data shows that Naphtha Israel Petroleum Corp. Ltd. has a market capitalization of ₪2.2b, and reported total annual CEO compensation of ₪2.0m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₪917k.

In comparison with other companies in the Israel Oil and Gas industry with market capitalizations ranging from ₪1.5b to ₪5.8b, the reported median CEO total compensation was ₪2.6m. This suggests that Naphtha Israel Petroleum remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	₪917k	₪874k	46%
Other	₪1.1m	₪1.1m	54%
Total Compensation	₪2.0m	₪1.9m	100%

Talking in terms of the industry, salary represented approximately 46% of total compensation out of all the companies we analyzed, while other remuneration made up 54% of the pie. Although there is a difference in how total compensation is set, Naphtha Israel Petroleum more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Naphtha Israel Petroleum Corp. Ltd.'s Growth

Over the last three years, Naphtha Israel Petroleum Corp. Ltd. has shrunk its earnings per share by 3.6% per year. Its revenue is up 5.3% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Naphtha Israel Petroleum Corp. Ltd. Been A Good Investment?

Most shareholders would probably be pleased with Naphtha Israel Petroleum Corp. Ltd. for providing a total return of 87% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns 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. We did our research and spotted 2 warning signs for Naphtha Israel Petroleum that investors should look into moving forward.

Switching gears from Naphtha Israel Petroleum, 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.