Is Maxim Integrated Products, Inc.’s (NASDAQ:MXIM) CEO Being Overpaid?

Tunç Doluca became the CEO of Maxim Integrated Products, Inc. (NASDAQ:MXIM) in 2007. This analysis aims first to contrast CEO compensation with other large companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Maxim Integrated Products

How Does Tunç Doluca’s Compensation Compare With Similar Sized Companies?

According to our data, Maxim Integrated Products, Inc. has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$9.1m over the year to June 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$800k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of Maxim Integrated Products. Speaking on an industry level, we can see that nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Maxim Integrated Products, in sharp contrast to the overall sector.

So Tunç Doluca receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance. The graphic below shows how CEO compensation at Maxim Integrated Products has changed from year to year.

NasdaqGS:MXIM CEO Compensation, March 24th 2020
NasdaqGS:MXIM CEO Compensation, March 24th 2020

Is Maxim Integrated Products, Inc. Growing?

Over the last three years Maxim Integrated Products, Inc. has grown its earnings per share (EPS) by an average of 20% per year (using a line of best fit). Its revenue is down 13% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. It could be important to check this free visual depiction of what analysts expect for the future.

Has Maxim Integrated Products, Inc. Been A Good Investment?

Maxim Integrated Products, Inc. has generated a total shareholder return of 12% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

Tunç Doluca is paid around what is normal for the leaders of larger companies.

Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. So upon reflection one could argue that the CEO pay is quite reasonable. Looking into other areas, we’ve picked out 2 warning signs for Maxim Integrated Products that investors should think about before committing capital to this stock.

If you want to buy a stock that is better than Maxim Integrated Products, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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