We Think Some Shareholders May Hesitate To Increase Mercedes-Benz Group AG's (ETR:MBG) CEO Compensation
Key Insights
- Mercedes-Benz Group will host its Annual General Meeting on 7th of May
- Salary of €1.88m is part of CEO Ola Kallenius's total remuneration
- The overall pay is comparable to the industry average
- Mercedes-Benz Group's three-year loss to shareholders was 1.9% while its EPS grew by 2.1% over the past three years
In the past three years, the share price of Mercedes-Benz Group AG (ETR:MBG) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 7th of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
See our latest analysis for Mercedes-Benz Group
How Does Total Compensation For Ola Kallenius Compare With Other Companies In The Industry?
At the time of writing, our data shows that Mercedes-Benz Group AG has a market capitalization of €50b, and reported total annual CEO compensation of €7.5m for the year to December 2024. That's a notable increase of 10% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.9m.
In comparison with other companies in the German Auto industry with market capitalizations over €7.1b, the reported median total CEO compensation was €7.8m. This suggests that Mercedes-Benz Group remunerates its CEO largely in line with the industry average.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | €1.9m | €1.8m | 25% |
| Other | €5.7m | €5.1m | 75% |
| Total Compensation | €7.5m | €6.8m | 100% |
Speaking on an industry level, nearly 29% of total compensation represents salary, while the remainder of 71% is other remuneration. Mercedes-Benz Group pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Mercedes-Benz Group AG's Growth Numbers
Over the past three years, Mercedes-Benz Group AG has seen its earnings per share (EPS) grow by 2.1% per year. It saw its revenue drop 4.5% over the last year.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Mercedes-Benz Group AG Been A Good Investment?
Since shareholders would have lost about 1.9% over three years, some Mercedes-Benz Group AG investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which are a bit unpleasant) in Mercedes-Benz Group we think you should know about.
Important note: Mercedes-Benz Group 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.