Why We Think Hiron-Trade Investments & Industrial Buildings Ltd's (TLV:HRON) CEO Compensation Is Not Excessive At All

Key Insights

• Hiron-Trade Investments & Industrial Buildings' Annual General Meeting to take place on 22nd of September
• CEO Arie Amir's total compensation includes salary of ₪1.81m
• The total compensation is 40% less than the average for the industry
• Hiron-Trade Investments & Industrial Buildings' total shareholder return over the past three years was 32% while its EPS was down 11% over the past three years

Performance at Hiron-Trade Investments & Industrial Buildings Ltd (TLV:HRON) has been rather uninspiring recently and shareholders may be wondering how CEO Arie Amir plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 22nd of September. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Hiron-Trade Investments & Industrial Buildings

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

According to our data, Hiron-Trade Investments & Industrial Buildings Ltd has a market capitalization of ₪934m, and paid its CEO total annual compensation worth ₪1.8m over the year to December 2023. Notably, that's a decrease of 12% over the year before. Notably, the salary of ₪1.8m is the entirety of the CEO compensation.

For comparison, other companies in the Israel Real Estate industry with market capitalizations ranging between ₪372m and ₪1.5b had a median total CEO compensation of ₪3.0m. Accordingly, Hiron-Trade Investments & Industrial Buildings pays its CEO under the industry median. What's more, Arie Amir holds ₪195m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	₪1.8m	₪2.1m	100%
Other	-	-	-
Total Compensation	₪1.8m	₪2.1m	100%

On an industry level, roughly 53% of total compensation represents salary and 47% is other remuneration. On a company level, Hiron-Trade Investments & Industrial Buildings prefers to reward its CEO through a salary, opting not to pay Arie Amir through non-salary benefits. 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.

Hiron-Trade Investments & Industrial Buildings Ltd's Growth

Over the last three years, Hiron-Trade Investments & Industrial Buildings Ltd has shrunk its earnings per share by 11% per year. It saw its revenue drop 5.1% over the last year.

Few shareholders would be pleased to read that EPS 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. 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 Hiron-Trade Investments & Industrial Buildings Ltd Been A Good Investment?

Hiron-Trade Investments & Industrial Buildings Ltd has generated a total shareholder return of 32% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Hiron-Trade Investments & Industrial Buildings pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Hiron-Trade Investments & Industrial Buildings you should be aware of, and 1 of them doesn't sit too well with us.

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.