Volvo Car AB (publ.)'s (STO:VOLCAR B) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Volvo Car AB (publ.) will host its Annual General Meeting on 3rd of April
• Total pay for CEO Jim Rowan includes kr16.7m salary
• The overall pay is 841% above the industry average
• Volvo Car AB (publ.)'s three-year loss to shareholders was 72% while its EPS grew by 3.1% over the past three years

The underwhelming share price performance of Volvo Car AB (publ.) (STO:VOLCAR B) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 3rd of April. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Volvo Car AB (publ.)

Comparing Volvo Car AB (publ.)'s CEO Compensation With The Industry

At the time of writing, our data shows that Volvo Car AB (publ.) has a market capitalization of kr57b, and reported total annual CEO compensation of kr75m for the year to December 2024. Notably, that's an increase of 10% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at kr17m.

On examining similar-sized companies in the Sweden Auto industry with market capitalizations between kr40b and kr120b, we discovered that the median CEO total compensation of that group was kr8.0m. Hence, we can conclude that Jim Rowan is remunerated higher than the industry median. Moreover, Jim Rowan also holds kr13m worth of Volvo Car AB (publ.) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 25% of total compensation represents salary and 75% is other remuneration. Volvo Car AB (publ.) sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Volvo Car AB (publ.)'s Growth

Volvo Car AB (publ.) has seen its earnings per share (EPS) increase by 3.1% a year over the past three years. In the last year, its revenue changed by just 0.2%.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Volvo Car AB (publ.) Been A Good Investment?

With a total shareholder return of -72% over three years, Volvo Car AB (publ.) shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

Whatever your view on compensation, you might want to check if insiders are buying or selling Volvo Car AB (publ.) shares (free trial).

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.