We Discuss Why GSI Technology, Inc.'s (NASDAQ:GSIT) CEO Compensation May Be Closely Reviewed

GSI Technology, Inc. (NASDAQ:GSIT) has not performed well recently and CEO Lee-Lean Shu 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 26 August 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for GSI Technology

How Does Total Compensation For Lee-Lean Shu Compare With Other Companies In The Industry?

Our data indicates that GSI Technology, Inc. has a market capitalization of US$124m, and total annual CEO compensation was reported as US$719k for the year to March 2021. We note that's a decrease of 15% compared to last year. Notably, the salary which is US$431.9k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$465k. Accordingly, our analysis reveals that GSI Technology, Inc. pays Lee-Lean Shu north of the industry median. What's more, Lee-Lean Shu holds US$13m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	US$432k	US$432k	60%
Other	US$287k	US$411k	40%
Total Compensation	US$719k	US$843k	100%

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. According to our research, GSI Technology has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

GSI Technology, Inc.'s Growth

GSI Technology, Inc. has reduced its earnings per share by 83% a year over the last three years. It saw its revenue drop 19% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 GSI Technology, Inc. Been A Good Investment?

Since shareholders would have lost about 23% over three years, some GSI Technology, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for GSI Technology (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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.
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