Yahoo Finance Shareholders May Be More Conservative With Caesarstone Ltd.'s (NASDAQ:CSTE) CEO Compensation For Now
In the past three years, the share price of Caesarstone Ltd. (NASDAQ:CSTE) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 17 November 2021. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
View our latest analysis for Caesarstone
Comparing Caesarstone Ltd.'s CEO Compensation With the industry
Our data indicates that Caesarstone Ltd. has a market capitalization of US$450m, and total annual CEO compensation was reported as US$1.7m for the year to December 2020. We note that's a decrease of 30% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$673k.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$628k. Accordingly, our analysis reveals that Caesarstone Ltd. pays Yuval Dagim north of the industry median.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$673k | US$661k | 40% |
Other | US$997k | US$1.7m | 60% |
Total Compensation | US$1.7m | US$2.4m | 100% |
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. According to our research, Caesarstone has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Caesarstone Ltd.'s Growth
Caesarstone Ltd.'s earnings per share (EPS) grew 4.8% per year over the last three years. Its revenue is up 26% over the last year.
It's great to see that revenue growth is strong. With that in mind, the modestly improving EPS seems positive. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Caesarstone Ltd. Been A Good Investment?
With a three year total loss of 7.3% for the shareholders, Caesarstone Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too 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. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
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 Caesarstone that investors should look into moving forward.
Important note: Caesarstone 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.
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.
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