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Is Bayerische Motoren Werke Aktiengesellschaft's (FRA:BMW) CEO Salary Justified?

Simply Wall St

Harald Krüger became the CEO of Bayerische Motoren Werke Aktiengesellschaft (FRA:BMW) in 2015. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Bayerische Motoren Werke

How Does Harald Krüger's Compensation Compare With Similar Sized Companies?

Our data indicates that Bayerische Motoren Werke Aktiengesellschaft is worth €50b, and total annual CEO compensation is €8.9m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €1.5m. We looked at a group of companies with market capitalizations over €7.1b and the median CEO total compensation was €4.3m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Thus we can conclude that Harald Krüger receives more in total compensation than the median of a group of large companies in the same market as Bayerische Motoren Werke Aktiengesellschaft. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Bayerische Motoren Werke has changed over time.

DB:BMW CEO Compensation, April 18th 2019

Is Bayerische Motoren Werke Aktiengesellschaft Growing?

On average over the last three years, Bayerische Motoren Werke Aktiengesellschaft has grown earnings per share (EPS) by 8.4% each year (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.

I would prefer it if there was revenue growth, but I'm happy with the EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has Bayerische Motoren Werke Aktiengesellschaft Been A Good Investment?

Bayerische Motoren Werke Aktiengesellschaft has not done too badly by shareholders, with a total return of 4.2%, over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared the total CEO remuneration paid by Bayerische Motoren Werke Aktiengesellschaft, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.

We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. So you may want to check if insiders are buying Bayerische Motoren Werke shares with their own money (free access).

Important note: Bayerische Motoren Werke may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.