Here's Why Shareholders May Want To Be Cautious With Increasing Overseas Commerce Ltd.'s (TLV:OVRS) CEO Pay Packet

Key Insights

• Overseas Commerce to hold its Annual General Meeting on 12th of September
• CEO Uri Shochet's total compensation includes salary of ₪1.28m
• The overall pay is 385% above the industry average
• Overseas Commerce's total shareholder return over the past three years was 17% while its EPS was down 73% over the past three years

Despite Overseas Commerce Ltd.'s (TLV:OVRS) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 12th of September. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Overseas Commerce

Comparing Overseas Commerce Ltd.'s CEO Compensation With The Industry

At the time of writing, our data shows that Overseas Commerce Ltd. has a market capitalization of ₪192m, and reported total annual CEO compensation of ₪1.8m for the year to December 2023. That's a notable decrease of 35% on last year. In particular, the salary of ₪1.28m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Israel Infrastructure industry with market capitalizations below ₪740m, we found that the median total CEO compensation was ₪374k. This suggests that Uri Shochet is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	₪1.3m	₪1.3m	70%
Other	₪540k	₪1.5m	30%
Total Compensation	₪1.8m	₪2.8m	100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Our data reveals that Overseas Commerce allocates salary more or less in line with the wider market. 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 Overseas Commerce Ltd.'s Growth Numbers

Over the last three years, Overseas Commerce Ltd. has shrunk its earnings per share by 73% per year. Its revenue is down 10% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Overseas Commerce Ltd. Been A Good Investment?

Overseas Commerce Ltd. has served shareholders reasonably well, with a total return of 17% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Overseas Commerce (2 are significant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.