Why We Think Lantronix, Inc.'s (NASDAQ:LTRX) CEO Compensation Is Not Excessive At All

Performance at Lantronix, Inc. (NASDAQ:LTRX) has been reasonably good and CEO Paul Pickle has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 08 November 2022, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

Our analysis indicates that LTRX is potentially overvalued!

Comparing Lantronix, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Lantronix, Inc. has a market capitalization of US$176m, and reported total annual CEO compensation of US$1.2m for the year to June 2022. We note that's an increase of 9.1% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$400k.

On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$1.0m. From this we gather that Paul Pickle is paid around the median for CEOs in the industry. What's more, Paul Pickle holds US$3.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	US$400k	US$400k	34%
Other	US$772k	US$675k	66%
Total Compensation	US$1.2m	US$1.1m	100%

Speaking on an industry level, nearly 18% of total compensation represents salary, while the remainder of 82% is other remuneration. According to our research, Lantronix has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Lantronix, Inc.'s Growth

Over the last three years, Lantronix, Inc. has shrunk its earnings per share by 4.1% per year. It achieved revenue growth of 81% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Lantronix, Inc. Been A Good Investment?

Boasting a total shareholder return of 59% over three years, Lantronix, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Although the company has performed relatively well, we still think there are some areas that could be improved. Still, we think that until shareholders see an improvement in EPS growth, they may find it hard to justify a pay rise for the CEO.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Lantronix that investors should look into moving forward.

Switching gears from Lantronix, 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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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.