Why We Think Shareholders May Be Considering Bumping Up RADA Electronic Industries Ltd.'s (NASDAQ:RADA) CEO Compensation

Shareholders will be pleased by the impressive results for RADA Electronic Industries Ltd. (NASDAQ:RADA) recently and CEO Dubi Sella has played a key role. At the upcoming AGM on 23 June 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

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$616m, and paid its CEO total annual compensation worth US$1.3m over the year to December 2020. We note that's an increase of 29% above last year. In particular, the salary of US$888.3k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$3.1m. In other words, RADA Electronic Industries pays its CEO lower than the industry median. Furthermore, Dubi Sella directly owns US$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$888k	US$575k	67%
Other	US$441k	US$455k	33%
Total Compensation	US$1.3m	US$1.0m	100%

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. RADA Electronic Industries pays out 67% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at RADA Electronic Industries Ltd.'s Growth Numbers

RADA Electronic Industries Ltd. has seen its earnings per share (EPS) increase by 55% a year over the past three years. Its revenue is up 70% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has RADA Electronic Industries Ltd. Been A Good Investment?

We think that the total shareholder return of 335%, over three years, would leave most RADA Electronic Industries Ltd. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for RADA Electronic Industries that investors should think about before committing capital to this stock.

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. 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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