Shareholders Will Probably Be Cautious Of Increasing TomTom N.V.'s (AMS:TOM2) CEO Compensation At The Moment

The anaemic share price growth at TomTom N.V. (AMS:TOM2) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. The upcoming AGM on 15 April 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for TomTom

How Does Total Compensation For Harold C. Goddijn Compare With Other Companies In The Industry?

According to our data, TomTom N.V. has a market capitalization of €1.1b, and paid its CEO total annual compensation worth €1.2m over the year to December 2020. That's a notable decrease of 26% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €494k.

In comparison with other companies in the industry with market capitalizations ranging from €840m to €2.7b, the reported median CEO total compensation was €1.0m. This suggests that TomTom remunerates its CEO largely in line with the industry average. What's more, Harold C. Goddijn holds €124m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	€494k	€474k	43%
Other	€668k	€1.1m	57%
Total Compensation	€1.2m	€1.6m	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. TomTom pays a modest slice of remuneration through salary, as compared 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.

TomTom N.V.'s Growth

TomTom N.V. has reduced its earnings per share by 19% a year over the last three years. Its revenue is down 25% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 TomTom N.V. Been A Good Investment?

With a total shareholder return of 3.8% over three years, TomTom N.V. has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for TomTom that investors should think about before committing capital to this stock.

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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