Here's Why Bayerische Motoren Werke Aktiengesellschaft's (ETR:BMW) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Bayerische Motoren Werke's Annual General Meeting to take place on 15th of May
• CEO Oliver Zipse's total compensation includes salary of €1.95m
• The overall pay is comparable to the industry average
• Bayerische Motoren Werke's total shareholder return over the past three years was 43% while its EPS was down 5.4% over the past three years

Despite strong share price growth of 43% for Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 15th of May. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Bayerische Motoren Werke

Comparing Bayerische Motoren Werke Aktiengesellschaft's CEO Compensation With The Industry

At the time of writing, our data shows that Bayerische Motoren Werke Aktiengesellschaft has a market capitalization of €64b, and reported total annual CEO compensation of €8.9m for the year to December 2023. That's a notable decrease of 18% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €2.0m.

On comparing similar companies in the German Auto industry with market capitalizations above €7.4b, we found that the median total CEO compensation was €6.8m. From this we gather that Oliver Zipse is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	€2.0m	€2.0m	22%
Other	€6.9m	€8.9m	78%
Total Compensation	€8.9m	€11m	100%

On an industry level, around 25% of total compensation represents salary and 75% is other remuneration. In Bayerische Motoren Werke's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Bayerische Motoren Werke Aktiengesellschaft's Growth Numbers

Over the last three years, Bayerische Motoren Werke Aktiengesellschaft has shrunk its earnings per share by 5.4% per year. Its revenue is up 4.7% over the last year.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. 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 Bayerische Motoren Werke Aktiengesellschaft Been A Good Investment?

Boasting a total shareholder return of 43% over three years, Bayerische Motoren Werke Aktiengesellschaft has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 Bayerische Motoren Werke that investors should be aware of in a dynamic business environment.

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. 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.