We Discuss Why Kamada Ltd.'s (TLV:KMDA) CEO Compensation May Be Closely Reviewed

Key Insights

• Kamada to hold its Annual General Meeting on 22 December 2022
• CEO Amir London's total compensation includes salary of US$412.0k
• Total compensation is 40% above industry average
• Kamada's EPS grew by -97% over the past three years while total shareholder return over the past three years was -42%

Shareholders will probably not be too impressed with the underwhelming results at Kamada Ltd. (TLV:KMDA) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 22 December 2022. 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 Kamada

How Does Total Compensation For Amir London Compare With Other Companies In The Industry?

Our data indicates that Kamada Ltd. has a market capitalization of ₪620m, and total annual CEO compensation was reported as US$663k for the year to December 2021. Notably, that's a decrease of 21% over the year before. In particular, the salary of US$412.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Israel Biotechs industry with market capitalizations ranging between ₪343m and ₪1.4b had a median total CEO compensation of US$472k. Hence, we can conclude that Amir London is remunerated higher than the industry median. What's more, Amir London holds ₪378k worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	US$412k	US$406k	62%
Other	US$251k	US$434k	38%
Total Compensation	US$663k	US$840k	100%

Speaking on an industry level, nearly 54% of total compensation represents salary, while the remainder of 46% is other remuneration. Kamada 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.

Kamada Ltd.'s Growth

Over the last three years, Kamada Ltd. has shrunk its earnings per share by 97% per year. Its revenue is up 11% over the last year.

The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Kamada Ltd. Been A Good Investment?

With a total shareholder return of -42% over three years, Kamada Ltd. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

So you may want to check if insiders are buying Kamada shares with their own money (free access).

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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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.