Here's Why It's Unlikely That Gentherm Incorporated's (NASDAQ:THRM) CEO Will See A Pay Rise This Year

Key Insights

• Gentherm will host its Annual General Meeting on 16th of May
• CEO Phil Eyler's total compensation includes salary of US$959.5k
• Total compensation is similar to the industry average
• Gentherm's EPS declined by 15% over the past three years while total shareholder loss over the past three years was 28%

Gentherm Incorporated (NASDAQ:THRM) has not performed well recently and CEO Phil Eyler will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 16th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Gentherm

Comparing Gentherm Incorporated's CEO Compensation With The Industry

According to our data, Gentherm Incorporated has a market capitalization of US$1.6b, and paid its CEO total annual compensation worth US$7.6m over the year to December 2023. We note that's an increase of 40% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$960k.

In comparison with other companies in the American Auto Components industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$6.7m. So it looks like Gentherm compensates Phil Eyler in line with the median for the industry. What's more, Phil Eyler holds US$5.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$960k	US$911k	13%
Other	US$6.6m	US$4.5m	87%
Total Compensation	US$7.6m	US$5.4m	100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Our data reveals that Gentherm allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Gentherm Incorporated's Growth

Gentherm Incorporated has reduced its earnings per share by 15% a year over the last three years. In the last year, its revenue is up 12%.

Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Gentherm Incorporated Been A Good Investment?

Given the total shareholder loss of 28% over three years, many shareholders in Gentherm Incorporated are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

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 Gentherm 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.