What Can We Make Of El Al Israel Airlines' (TLV:ELAL) CEO Compensation?

Gonen Usishkin became the CEO of El Al Israel Airlines Ltd. (TLV:ELAL) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for El Al Israel Airlines

How Does Total Compensation For Gonen Usishkin Compare With Other Companies In The Industry?

Our data indicates that El Al Israel Airlines Ltd. has a market capitalization of ₪881m, and total annual CEO compensation was reported as ₪575k for the year to December 2019. That's a notable decrease of 23% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₪575k.

On examining similar-sized companies in the industry with market capitalizations between ₪325m and ₪1.3b, we discovered that the median CEO total compensation of that group was ₪2.2m. That is to say, Gonen Usishkin is paid under the industry median.

Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. Speaking on a company level, El Al Israel Airlines prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at El Al Israel Airlines Ltd.'s Growth Numbers

Over the last three years, El Al Israel Airlines Ltd. has shrunk its earnings per share by 105% per year. In the last year, its revenue is down 52%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 El Al Israel Airlines Ltd. Been A Good Investment?

Since shareholders would have lost about 53% over three years, some El Al Israel Airlines Ltd. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

El Al Israel Airlines rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Gonen is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Gonen is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for El Al Israel Airlines that investors should look into moving forward.

Switching gears from El Al Israel Airlines, 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. 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.
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