How Is RADA Electronic Industries' (NASDAQ:RADA) CEO Paid Relative To Peers?

Dubi Sella became the CEO of RADA Electronic Industries Ltd. (NASDAQ:RADA) in 2016, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for RADA Electronic Industries.

View our latest analysis for RADA Electronic Industries

Comparing RADA Electronic Industries Ltd.'s CEO Compensation With the industry

According to our data, RADA Electronic Industries Ltd. has a market capitalization of US$381m, and paid its CEO total annual compensation worth US$1.0m over the year to December 2019. We note that's an increase of 31% above last year. We note that the salary portion, which stands at US$574.9k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.0m. This suggests that RADA Electronic Industries remunerates its CEO largely in line with the industry average. What's more, Dubi Sella holds US$4.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. According to our research, RADA Electronic Industries 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.

RADA Electronic Industries Ltd.'s Growth

RADA Electronic Industries Ltd.'s earnings per share (EPS) grew 9.5% per year over the last three years. In the last year, its revenue is up 75%.

It's hard to interpret the strong revenue growth as anything other than a positive. With that in mind, the modestly improving EPS seems positive. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has RADA Electronic Industries Ltd. Been A Good Investment?

Boasting a total shareholder return of 177% over three years, RADA Electronic Industries Ltd. has done well by shareholders. 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...

As we noted earlier, RADA Electronic Industries pays its CEO in line with similar-sized companies belonging to the same industry. But the company has been found wanting in terms of EPS growth over the past three years. At the same time, shareholder returns have remained strong over the same period. There is room for improved company performance, but we don't see the CEO compensation as a big issue here.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for RADA Electronic Industries that investors should look into moving forward.

Important note: RADA Electronic Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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