Here's Why Shareholders Will Not Be Complaining About Mercedes-Benz Group AG's (ETR:MBG) CEO Pay Packet

Key Insights

• Mercedes-Benz Group's Annual General Meeting to take place on 3rd of May
• CEO Ola Kallenius' total compensation includes salary of €1.66m
• The overall pay is comparable to the industry average
• Mercedes-Benz Group's total shareholder return over the past three years was 209% while its EPS grew by 83% over the past three years

It would be hard to discount the role that CEO Ola Kallenius has played in delivering the impressive results at Mercedes-Benz Group AG (ETR:MBG) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 3rd of May. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for Mercedes-Benz Group

Comparing Mercedes-Benz Group AG's CEO Compensation With The Industry

At the time of writing, our data shows that Mercedes-Benz Group AG has a market capitalization of €75b, and reported total annual CEO compensation of €6.1m for the year to December 2022. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.7m.

On comparing similar companies in the German Auto industry with market capitalizations above €7.3b, we found that the median total CEO compensation was €6.1m. From this we gather that Ola Kallenius is paid around the median for CEOs in the industry.

Component	2022	2021	Proportion (2022)
Salary	€1.7m	€1.7m	27%
Other	€4.4m	€4.5m	73%
Total Compensation	€6.1m	€6.1m	100%

Speaking on an industry level, nearly 29% of total compensation represents salary, while the remainder of 71% is other remuneration. Our data reveals that Mercedes-Benz Group allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Mercedes-Benz Group AG's Growth

Mercedes-Benz Group AG's earnings per share (EPS) grew 83% per year over the last three years. Its revenue is up 12% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Mercedes-Benz Group AG Been A Good Investment?

We think that the total shareholder return of 209%, over three years, would leave most Mercedes-Benz Group AG shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 2 which shouldn't be ignored) in Mercedes-Benz Group we think you should know about.

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.