Here's Why Shareholders May Want To Be Cautious With Increasing SiTime Corporation's (NASDAQ:SITM) CEO Pay Packet

Key Insights

• SiTime to hold its Annual General Meeting on 30th of May
• Total pay for CEO Rajesh Vashist includes US$650.0k salary
• Total compensation is 48% above industry average
• SiTime's total shareholder return over the past three years was 22% while its EPS was down 87% over the past three years

The share price of SiTime Corporation (NASDAQ:SITM) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 30th of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for SiTime

Comparing SiTime Corporation's CEO Compensation With The Industry

At the time of writing, our data shows that SiTime Corporation has a market capitalization of US$2.8b, and reported total annual CEO compensation of US$11m for the year to December 2023. That's just a smallish increase of 7.2% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$650k.

On comparing similar companies from the American Semiconductor industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$7.2m. This suggests that Rajesh Vashist is paid more than the median for the industry. What's more, Rajesh Vashist holds US$26m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$650k	US$650k	6%
Other	US$9.9m	US$9.2m	94%
Total Compensation	US$11m	US$9.9m	100%

Talking in terms of the industry, salary represented approximately 11% of total compensation out of all the companies we analyzed, while other remuneration made up 89% of the pie. SiTime sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

SiTime Corporation's Growth

Over the last three years, SiTime Corporation has shrunk its earnings per share by 87% per year. It saw its revenue drop 45% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 SiTime Corporation Been A Good Investment?

SiTime Corporation has generated a total shareholder return of 22% 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...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 4 warning signs for SiTime that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.