Stock Analysis

How Is Menora Mivtachim Holdings' (TLV:MMHD) CEO Paid Relative To Peers?

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Ari Kalman has been the CEO of Menora Mivtachim Holdings Ltd (TLV:MMHD) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Menora Mivtachim Holdings

Comparing Menora Mivtachim Holdings Ltd's CEO Compensation With the industry

Our data indicates that Menora Mivtachim Holdings Ltd has a market capitalization of ₪2.5b, and total annual CEO compensation was reported as ₪3.0m for the year to December 2019. That's a notable increase of 8.3% on last year. We note that the salary portion, which stands at ₪2.45m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between ₪1.4b and ₪5.5b, we discovered that the median CEO total compensation of that group was ₪3.0m. This suggests that Menora Mivtachim Holdings remunerates its CEO largely in line with the industry average. Furthermore, Ari Kalman directly owns ₪68m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary ₪2.4m ₪2.7m 82%
Other ₪526k - 18%
Total Compensation₪3.0m ₪2.7m100%

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. Our data reveals that Menora Mivtachim Holdings allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

TASE:MMHD CEO Compensation July 9th 2020
TASE:MMHD CEO Compensation July 9th 2020

A Look at Menora Mivtachim Holdings Ltd's Growth Numbers

Over the last three years, Menora Mivtachim Holdings Ltd has shrunk its earnings per share by 6.1% per year. It saw its revenue drop 28% over the last year.

Few shareholders would be pleased to read that earnings have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Menora Mivtachim Holdings Ltd Been A Good Investment?

Since shareholders would have lost about 5.5% over three years, some Menora Mivtachim Holdings Ltd investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Ari is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining earnings growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Menora Mivtachim Holdings (1 is potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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