Should Shareholders Reconsider Neto Malinda Trading Ltd.'s (TLV:NTML) CEO Compensation Package?

Key Insights

• Neto Malinda Trading's Annual General Meeting to take place on 2nd of September
• Total pay for CEO Oren Avni includes ₪960.0k salary
• The overall pay is 150% above the industry average
• Neto Malinda Trading's three-year loss to shareholders was 19% while its EPS was down 7.8% over the past three years

Neto Malinda Trading Ltd. (TLV:NTML) has not performed well recently and CEO Oren Avni will probably need to up their game. At the upcoming AGM on 2nd of September, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Neto Malinda Trading

How Does Total Compensation For Oren Avni Compare With Other Companies In The Industry?

Our data indicates that Neto Malinda Trading Ltd. has a market capitalization of ₪1.3b, and total annual CEO compensation was reported as ₪1.0m for the year to December 2023. This was the same as last year. We note that the salary portion, which stands at ₪960.0k constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the Israel Food industry with market capitalizations between ₪736m and ₪2.9b, we discovered that the median CEO total compensation of that group was ₪418k. This suggests that Oren Avni is paid more than the median for the industry.

Component	2023	2023	Proportion (2023)
Salary	₪960k	₪960k	92%
Other	₪85k	₪85k	8%
Total Compensation	₪1.0m	₪1.0m	100%

Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. It's interesting to note that Neto Malinda Trading 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 Neto Malinda Trading Ltd.'s Growth Numbers

Neto Malinda Trading Ltd. has reduced its earnings per share by 7.8% a year over the last three years. It achieved revenue growth of 6.6% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Neto Malinda Trading Ltd. Been A Good Investment?

Given the total shareholder loss of 19% over three years, many shareholders in Neto Malinda Trading Ltd. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Neto Malinda Trading that you should be aware of before investing.

Switching gears from Neto Malinda Trading, 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.