We Think Sella Capital Real Estate Ltd.'s (TLV:SLARL) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Sella Capital Real Estate will host its Annual General Meeting on 10th of November
• Salary of ₪2.07m is part of CEO Gadi Elikam's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, Sella Capital Real Estate's EPS fell by 8.4% and over the past three years, the total loss to shareholders 18%

Shareholders will probably not be too impressed with the underwhelming results at Sella Capital Real Estate Ltd. (TLV:SLARL) recently. At the upcoming AGM on 10th of November, shareholders can hear from the board including their plans for turning around performance. 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 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 ₪1.8b, 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. We note that the salary portion, which stands at ₪2.07m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Israel REITs industry with market capitalizations ranging between ₪749m and ₪3.0b had a median total CEO compensation of ₪3.1m. From this we gather that Gadi Elikam is paid around the median for CEOs in the industry. What's more, Gadi Elikam holds ₪10m 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%

Speaking on an industry level, nearly 39% of total compensation represents salary, while the remainder of 61% 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.

A Look at Sella Capital Real Estate Ltd.'s Growth Numbers

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%.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sella Capital Real Estate Ltd. Been A Good Investment?

Since shareholders would have lost about 18% 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...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

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. We did our research and identified 4 warning signs (and 2 which are 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.