Key Insights

• Gentherm's Annual General Meeting to take place on 16th of May
• Salary of US$959.5k is part of CEO Phil Eyler's total remuneration
• The total compensation is similar to the average for the industry
• Gentherm's three-year loss to shareholders was 28% while its EPS was down 15% over the past three years

The results at Gentherm Incorporated (NASDAQ:THRM) have been quite disappointing recently and CEO Phil Eyler bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 16th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Comparing Gentherm Incorporated's CEO Compensation With The Industry

Our data indicates that Gentherm Incorporated has a market capitalization of US$1.6b, and total annual CEO compensation was reported as US$7.6m for the year to December 2023. Notably, that's an increase of 40% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$960k.

For comparison, other companies in the American Auto Components industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$6.7m. From this we gather that Phil Eyler is paid around the median for CEOs in 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.

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. There isn't a significant difference between Gentherm and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Gentherm Incorporated's Growth

Over the last three years, Gentherm Incorporated has shrunk its earnings per share by 15% per year. It achieved revenue growth of 12% over the last year.

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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

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.

In Summary...

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 can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Gentherm that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.