Magna International Inc.'s (TSE:MG) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Magna International's Annual General Meeting to take place on 8th of May
• CEO Swamy Kotagiri's total compensation includes salary of US$1.25m
• The overall pay is 1,040% above the industry average
• Over the past three years, Magna International's EPS fell by 11% and over the past three years, the total loss to shareholders 30%

We've discovered 1 warning sign about Magna International. View them for free.

Shareholders will probably not be too impressed with the underwhelming results at Magna International Inc. (TSE:MG) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 8th of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Magna International

How Does Total Compensation For Swamy Kotagiri Compare With Other Companies In The Industry?

According to our data, Magna International Inc. has a market capitalization of CA$13b, and paid its CEO total annual compensation worth US$17m over the year to December 2024. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

For comparison, other companies in the Canada Auto Components industry with market capitalizations above CA$11b, reported a median total CEO compensation of US$1.5m. Accordingly, our analysis reveals that Magna International Inc. pays Swamy Kotagiri north of the industry median. Furthermore, Swamy Kotagiri directly owns CA$11m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	US$1.3m	US$325k	7%
Other	US$16m	US$17m	93%
Total Compensation	US$17m	US$17m	100%

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. Magna International pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Magna International Inc.'s Growth

Magna International Inc. has reduced its earnings per share by 11% a year over the last three years. In the last year, its revenue changed by just 0.09%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Magna International Inc. Been A Good Investment?

Since shareholders would have lost about 30% over three years, some Magna International Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in 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. That's why we did some digging and identified 1 warning sign for Magna International that investors should think about before committing capital to this stock.

Important note: Magna International 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. 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.