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We Think Some Shareholders May Hesitate To Increase General Motors Company's (NYSE:GM) CEO Compensation

Key Insights

  • General Motors will host its Annual General Meeting on 4th of June

  • Salary of US$2.10m is part of CEO Mary Barra's total remuneration

  • The total compensation is 94% higher than the average for the industry

  • Over the past three years, General Motors' EPS grew by 14% and over the past three years, the total loss to shareholders 27%

In the past three years, the share price of General Motors Company (NYSE:GM) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 4th of June could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for General Motors

Comparing General Motors Company's CEO Compensation With The Industry

Our data indicates that General Motors Company has a market capitalization of US$49b, and total annual CEO compensation was reported as US$28m for the year to December 2023. That's a slight decrease of 3.9% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$2.1m.

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In comparison with other companies in the American Auto industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$14m. Accordingly, our analysis reveals that General Motors Company pays Mary Barra north of the industry median. Furthermore, Mary Barra directly owns US$81m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2023

2022

Proportion (2023)

Salary

US$2.1m

US$2.1m

8%

Other

US$26m

US$27m

92%

Total Compensation

US$28m

US$29m

100%

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. In General Motors' case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.

ceo-compensation
ceo-compensation

A Look at General Motors Company's Growth Numbers

General Motors Company's earnings per share (EPS) grew 14% per year over the last three years. It achieved revenue growth of 8.8% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 General Motors Company Been A Good Investment?

Since shareholders would have lost about 27% over three years, some General Motors Company 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. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for General Motors you should be aware of, and 2 of them don't sit too well with us.

Switching gears from General Motors, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.