Here's Why Sella Capital Real Estate Ltd.'s (TLV:SLARL) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Sella Capital Real Estate to hold its Annual General Meeting on 16th of December
• Total pay for CEO Gadi Elikam includes ₪2.07m salary
• Total compensation is similar to the industry average
• Sella Capital Real Estate's total shareholder return over the past three years was 7.2% while its EPS was down 8.4% over the past three years

Despite Sella Capital Real Estate Ltd.'s (TLV:SLARL) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 16th of December. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Sella Capital Real Estate

Comparing Sella Capital Real Estate Ltd.'s CEO Compensation With The Industry

Our data indicates that Sella Capital Real Estate Ltd. has a market capitalization of ₪2.2b, and total annual CEO compensation was reported as ₪3.3m for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of ₪2.07m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Israel REITs industry with market capitalizations between ₪1.4b and ₪5.7b, we discovered that the median CEO total compensation of that group was ₪3.3m. From this we gather that Gadi Elikam is paid around the median for CEOs in the industry. What's more, Gadi Elikam holds ₪12m 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	₪2.1m	₪1.9m	64%
Other	₪1.2m	₪1.4m	36%
Total Compensation	₪3.3m	₪3.3m	100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. According to our research, Sella Capital Real Estate has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Sella Capital Real Estate Ltd.'s Growth

Over the last three years, Sella Capital Real Estate Ltd. has shrunk its earnings per share by 8.4% per year. In the last year, its revenue is up 4.6%.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Sella Capital Real Estate Ltd. Been A Good Investment?

Sella Capital Real Estate Ltd. has generated a total shareholder return of 7.2% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Sella Capital Real Estate (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Sella Capital Real Estate, 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.