Should Shareholders Reconsider Sella Capital Real Estate Ltd.'s (TLV:SLARL) CEO Compensation Package?

Key Insights

• Sella Capital Real Estate's Annual General Meeting to take place on 2nd of September
• Salary of ₪2.07m is part of CEO Gadi Elikam's total remuneration
• The overall pay is comparable to the industry average
• Sella Capital Real Estate's three-year loss to shareholders was 7.2% while its EPS was down 12% over the past three years

Sella Capital Real Estate Ltd. (TLV:SLARL) has not performed well recently and CEO Gadi Elikam will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 2nd of September. 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. We present the case why we think CEO compensation is out of sync with company performance.

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 ₪1.6b, and total annual CEO compensation was reported as ₪3.3m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of ₪2.07m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Israel REITs industry with market caps ranging from ₪736m to ₪2.9b, we found that the median CEO total compensation was ₪2.8m. This suggests that Sella Capital Real Estate remunerates its CEO largely in line with the industry average. What's more, Gadi Elikam holds ₪9.0m 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%

Talking in terms of the industry, salary represented approximately 40% of total compensation out of all the companies we analyzed, while other remuneration made up 60% of the pie. Sella Capital Real Estate pays out 64% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Sella Capital Real Estate Ltd.'s Growth

Sella Capital Real Estate Ltd. has reduced its earnings per share by 12% a year over the last three years. It achieved revenue growth of 4.9% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Sella Capital Real Estate Ltd. Been A Good Investment?

Since shareholders would have lost about 7.2% over three years, some Sella Capital Real Estate Ltd. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is a bit concerning) in Sella Capital Real Estate we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.