A Quick Analysis On Monolithic Power Systems' (NASDAQ:MPWR) CEO Compensation

By
Simply Wall St
Published
November 03, 2020
NasdaqGS:MPWR

This article will reflect on the compensation paid to Michael Hsing who has served as CEO of Monolithic Power Systems, Inc. (NASDAQ:MPWR) since 1997. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Monolithic Power Systems

How Does Total Compensation For Michael Hsing Compare With Other Companies In The Industry?

Our data indicates that Monolithic Power Systems, Inc. has a market capitalization of US$14b, and total annual CEO compensation was reported as US$9.4m for the year to December 2019. We note that's a decrease of 20% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$650k.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. So it looks like Monolithic Power Systems compensates Michael Hsing in line with the median for the industry. What's more, Michael Hsing holds US$342m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$650k US$644k 7%
Other US$8.7m US$11m 93%
Total CompensationUS$9.4m US$12m100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. It's interesting to note that Monolithic Power Systems allocates a smaller portion of compensation to salary 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
NasdaqGS:MPWR CEO Compensation November 3rd 2020

Monolithic Power Systems, Inc.'s Growth

Monolithic Power Systems, Inc.'s earnings per share (EPS) grew 27% per year over the last three years. In the last year, its revenue is up 27%.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Monolithic Power Systems, Inc. Been A Good Investment?

We think that the total shareholder return of 163%, over three years, would leave most Monolithic Power Systems, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As previously discussed, Michael is compensated close to the median for companies of its size, and which belong to the same industry. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Monolithic Power Systems 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. 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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