We Think G City Ltd's (TLV:GCT) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• G City's Annual General Meeting to take place on 3rd of December
• CEO Chaim Katzman's total compensation includes salary of ₪3.39m
• Total compensation is 93% above industry average
• G City's EPS declined by 83% over the past three years while total shareholder loss over the past three years was 29%

Shareholders will probably not be too impressed with the underwhelming results at G City Ltd (TLV:GCT) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 3rd of December. 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 G City

How Does Total Compensation For Chaim Katzman Compare With Other Companies In The Industry?

According to our data, G City Ltd has a market capitalization of ₪1.9b, and paid its CEO total annual compensation worth ₪5.6m over the year to December 2022. That is, the compensation was roughly the same as last year. In particular, the salary of ₪3.39m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Israel Real Estate industry with market capitalizations ranging from ₪748m to ₪3.0b, the reported median CEO total compensation was ₪2.9m. Hence, we can conclude that Chaim Katzman is remunerated higher than the industry median. What's more, Chaim Katzman holds ₪4.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	₪3.4m	₪2.1m	61%
Other	₪2.2m	₪3.5m	39%
Total Compensation	₪5.6m	₪5.6m	100%

Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. G City is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at G City Ltd's Growth Numbers

Over the last three years, G City Ltd has shrunk its earnings per share by 83% per year. In the last year, its revenue changed by just 0.2%.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. 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 G City Ltd Been A Good Investment?

Since shareholders would have lost about 29% over three years, some G City Ltd investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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.

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 1 warning sign for G City that investors should look into moving forward.

Important note: G City is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.