What Can We Learn About Gold Bond Group's (TLV:GOLD) CEO Compensation?

Arye Kerman became the CEO of The Gold Bond Group Ltd. (TLV:GOLD) in 2002, 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 Gold Bond Group

Comparing The Gold Bond Group Ltd.'s CEO Compensation With the industry

Our data indicates that The Gold Bond Group Ltd. has a market capitalization of ₪477m, and total annual CEO compensation was reported as ₪3.4m for the year to December 2019. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₪1.4m.

In comparison with other companies in the industry with market capitalizations under ₪668m, the reported median total CEO compensation was ₪676k. This suggests that Arye Kerman is paid more than the median for the industry. What's more, Arye Kerman holds ₪6.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 78% of total compensation out of all the companies we analyzed, while other remuneration made up 22% of the pie. Gold Bond Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

The Gold Bond Group Ltd.'s Growth

Over the last three years, The Gold Bond Group Ltd. has shrunk its earnings per share by 23% per year. In the last year, its revenue is down 1.5%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has The Gold Bond Group Ltd. Been A Good Investment?

Given the total shareholder loss of 20% over three years, many shareholders in The Gold Bond Group Ltd. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Gold Bond Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Gold Bond Group that investors should be aware of in a dynamic business environment.

Switching gears from Gold Bond Group, 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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