In 2002 Balu Balakrishnan was appointed CEO of Power Integrations, Inc. (NASDAQ:POWI). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Balu Balakrishnan’s Compensation Compare With Similar Sized Companies?
Our data indicates that Power Integrations, Inc. is worth US$2.5b, and total annual CEO compensation is US$5.0m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$593k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.
So Balu Balakrishnan receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Power Integrations has changed from year to year.
Is Power Integrations, Inc. Growing?
Over the last three years Power Integrations, Inc. has grown its earnings per share (EPS) by an average of 3.4% per year (using a line of best fit). In the last year, its revenue is down -8.5%.
I generally like to see a little revenue growth, but the improvement in EPS is good. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching.
Has Power Integrations, Inc. Been A Good Investment?
Boasting a total shareholder return of 55% over three years, Power Integrations, Inc. has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Remuneration for Balu Balakrishnan is close enough to the median pay for a CEO of a similar sized company .
While the growth could be better, the shareholder returns are clearly good. So we can conclude that on this analysis the CEO compensation seems pretty sound. Shareholders may want to check for free if Power Integrations insiders are buying or selling shares.
If you want to buy a stock that is better than Power Integrations, this free list of high return, low debt companies is a great place to look.
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