Despite the huge drop in value in the company Cornit Digital – A loss of 5.9 billion dollars during the year 2022, during which the company’s stock collapsed by 85% – The shareholders express confidence in the company’s management and last week approved the increase in capital compensation for the CEO, Ronan Samuel.
● Kornit Digital is preparing for a second round of layoffs after plunging nearly 90%
● Kornit published a tepid forecast: “Not immune to macroeconomic pressures”
Kornit is traded on Nasdaq according to a market value of about 1.14 billion dollars. The company provides solutions for the fashion market – it produces digital printing systems for printing on textiles, which allow its customers to print the clothes close to consumers and according to their personal preferences.
During the year 2022, the company reported on the impact of the pressures of the macroeconomic environment on it, and even switched to a loss.
Kornit also carried out two rounds of layoffs in the past year: in July, it laid off about 30 employees, which constituted 3.5% of all employees in the company, and at the end of the year, it laid off a similar number.
However, as mentioned, at the meeting convened last week, Kornit’s shareholders approved by a large majority of 95% the new remuneration conditions for the CEO. In fact, it is an increase in the annual capital allocation to Samuel, while the other remuneration conditions are unchanged.
Kornit: “Rewards are low compared to the industry”
If previously the target of the annual allocation to Samuel was restricted shares amounting to $650,000, and restricted shares maturing based on performance amounting to $650,000, now he will be allocated restricted shares of each type worth $1.25 million, for a total of $2.5 million – an increase of 1.2 million dollar.
Samuel’s base salary remains approximately $442,000 per year, and he is entitled to an annual bonus of up to 100% of his annual salary. That means his current compensation target is up to about $3.4 million per year (for comparison, the cost of his salary in 2021 was about $2.3 million).
In the summons to the meeting, Kornit Digital stated that compared to a group of 16 similar companies, including companies from the various fields of printing, Samuel’s annual compensation was much lower than most other companies, while the profit was slightly below average.
“We are very careful with the work assumptions”
Another figure presented by the company was the average market value of the company in the previous 12 months, and in this figure Korinit is above the average in relation to the other companies.
However, as mentioned Kornit lost a significant part of its value in the past year, and since the peak of November 2021 it has presented a negative return of 87% (the declines erased all the gains of the previous years).
In an interview with Globes upon the publication of the third quarter reports, Ronan Samuel explained that the macroeconomic problems are affecting the company’s customers, who, due to inflation and interest, are delaying decisions to purchase additional original machines, which lengthens sales cycles.
Referring to the question of what is expected in 2023, he then replied: “We are still very cautious with the job assumptions because of the macroeconomic situation. The high interest rate and inflation first of all affect the purchase of capital equipment, and many companies are waiting. At the same time, the situation also affects the sentiment of the final consumer , who buys clothes online”.
Samuel then added that investors strongly believe in the company, many of them are long-term investors who understand the current cycle and support Kornit’s strategy.