We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Arad Investment & Industrial Development Ltd.'s (TLV:ARAD) CEO For Now

Key Insights

• Arad Investment & Industrial Development will host its Annual General Meeting on 6th of January
• CEO Ilan Toker's total compensation includes salary of ₪2.04m
• The overall pay is 532% above the industry average
• Over the past three years, Arad Investment & Industrial Development's EPS fell by 55% and over the past three years, the total shareholder return was 135%

Under the guidance of CEO Ilan Toker, Arad Investment & Industrial Development Ltd. (TLV:ARAD) has performed reasonably well recently. As shareholders go into the upcoming AGM on 6th of January, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Arad Investment & Industrial Development

Comparing Arad Investment & Industrial Development Ltd.'s CEO Compensation With The Industry

At the time of writing, our data shows that Arad Investment & Industrial Development Ltd. has a market capitalization of ₪963m, and reported total annual CEO compensation of ₪3.1m for the year to December 2023. That's a notable increase of 27% on last year. Notably, the salary which is ₪2.04m, represents most of the total compensation being paid.

For comparison, other companies in the Israel IT industry with market capitalizations ranging between ₪366m and ₪1.5b had a median total CEO compensation of ₪488k. Accordingly, our analysis reveals that Arad Investment & Industrial Development Ltd. pays Ilan Toker north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	₪2.0m	₪1.8m	66%
Other	₪1.1m	₪670k	34%
Total Compensation	₪3.1m	₪2.4m	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. Arad Investment & Industrial Development pays out 66% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Arad Investment & Industrial Development Ltd.'s Growth

Over the last three years, Arad Investment & Industrial Development Ltd. has shrunk its earnings per share by 55% per year. Its revenue is up 51% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Arad Investment & Industrial Development Ltd. Been A Good Investment?

Most shareholders would probably be pleased with Arad Investment & Industrial Development Ltd. for providing a total return of 135% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Some shareholders will be pleased by the relatively good results, however, the results could still be improved. EPS growth is still weak, and until that picks up, shareholders may find it hard to approve a pay rise for the CEO, since they are already paid above the average in their industry.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Arad Investment & Industrial Development you should be aware of, and 2 of them make us uncomfortable.

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.