We Think Shareholders Will Probably Be Generous With Monolithic Power Systems, Inc.'s (NASDAQ:MPWR) CEO Compensation

By
Simply Wall St
Published
June 03, 2021
NasdaqGS:MPWR
Source: Shutterstock

We have been pretty impressed with the performance at Monolithic Power Systems, Inc. (NASDAQ:MPWR) recently and CEO Michael Hsing deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 10 June 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for Monolithic Power Systems

Comparing Monolithic Power Systems, Inc.'s CEO Compensation With the industry

According to our data, Monolithic Power Systems, Inc. has a market capitalization of US$15b, and paid its CEO total annual compensation worth US$15m over the year to December 2020. We note that's an increase of 57% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$650k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. So it looks like Monolithic Power Systems compensates Michael Hsing in line with the median for the industry. Furthermore, Michael Hsing directly owns US$389m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$650k US$650k 4%
Other US$14m US$8.7m 96%
Total CompensationUS$15m US$9.4m100%

On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. Investors may find it interesting that Monolithic Power Systems paid a marginal salary to Michael Hsing, over the past year, focusing on non-salary compensation instead. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqGS:MPWR CEO Compensation June 4th 2021

Monolithic Power Systems, Inc.'s Growth

Monolithic Power Systems, Inc.'s earnings per share (EPS) grew 30% per year over the last three years. Its revenue is up 43% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Monolithic Power Systems, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Monolithic Power Systems, Inc. for providing a total return of 157% over three years. 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.

In Summary...

Monolithic Power Systems primarily uses non-salary benefits to reward its CEO. Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Monolithic Power Systems that investors should think about before committing capital to this stock.

Switching gears from Monolithic Power Systems, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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