Shareholders May Be Wary Of Increasing Magnachip Semiconductor Corporation's (NYSE:MX) CEO Compensation Package

Key Insights

• Magnachip Semiconductor's Annual General Meeting to take place on 23rd of June
• Salary of US$561.7k is part of CEO YJ Kim's total remuneration
• The total compensation is 272% higher than the average for the industry
• Magnachip Semiconductor's three-year loss to shareholders was 77% while its EPS was down 92% over the past three years

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Shareholders will probably not be too impressed with the underwhelming results at Magnachip Semiconductor Corporation (NYSE:MX) recently. At the upcoming AGM on 23rd of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Magnachip Semiconductor

How Does Total Compensation For YJ Kim Compare With Other Companies In The Industry?

Our data indicates that Magnachip Semiconductor Corporation has a market capitalization of US$138m, and total annual CEO compensation was reported as US$3.1m for the year to December 2024. We note that's a decrease of 48% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$562k.

For comparison, other companies in the American Semiconductor industry with market capitalizations below US$200m, reported a median total CEO compensation of US$826k. Hence, we can conclude that YJ Kim is remunerated higher than the industry median. Furthermore, YJ Kim directly owns US$2.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 13% of total compensation represents salary, while the remainder of 87% is other remuneration. Magnachip Semiconductor pays out 18% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Magnachip Semiconductor Corporation's Growth Numbers

Over the last three years, Magnachip Semiconductor Corporation has shrunk its earnings per share by 92% per year. In the last year, its revenue is up 7.6%.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. 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 Magnachip Semiconductor Corporation Been A Good Investment?

The return of -77% over three years would not have pleased Magnachip Semiconductor Corporation shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Magnachip Semiconductor that investors should be aware of in a dynamic business environment.

Important note: Magnachip Semiconductor is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.