Shareholders May Find It Hard To Justify Increasing Ormat Technologies, Inc.'s (NYSE:ORA) CEO Compensation For Now

Key Insights

• Ormat Technologies' Annual General Meeting to take place on 8th of May
• CEO Doron Blachar's total compensation includes salary of US$528.3k
• Total compensation is similar to the industry average
• Ormat Technologies' EPS grew by 7.5% over the past three years while total shareholder loss over the past three years was 2.3%

In the past three years, shareholders of Ormat Technologies, Inc. (NYSE:ORA) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 8th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Ormat Technologies

How Does Total Compensation For Doron Blachar Compare With Other Companies In The Industry?

Our data indicates that Ormat Technologies, Inc. has a market capitalization of US$3.9b, and total annual CEO compensation was reported as US$3.1m for the year to December 2023. That's a notable increase of 49% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$528k.

In comparison with other companies in the American Renewable Energy industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$3.2m. This suggests that Ormat Technologies remunerates its CEO largely in line with the industry average. What's more, Doron Blachar holds US$1.4m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	US$528k	US$507k	17%
Other	US$2.5m	US$1.6m	83%
Total Compensation	US$3.1m	US$2.1m	100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. Ormat Technologies sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Ormat Technologies, Inc.'s Growth

Ormat Technologies, Inc.'s earnings per share (EPS) grew 7.5% per year over the last three years. Its revenue is up 13% over the last year.

We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. 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 Ormat Technologies, Inc. Been A Good Investment?

Given the total shareholder loss of 2.3% over three years, many shareholders in Ormat Technologies, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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've identified 1 warning sign for Ormat Technologies that investors should be aware of in a dynamic business environment.

Switching gears from Ormat Technologies, 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. 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.