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What Does GSI Technology's (NASDAQ:GSIT) CEO Pay Reveal?

Simply Wall St

Lee-Lean Shu has been the CEO of GSI Technology, Inc. (NASDAQ:GSIT) since 1995, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for GSI Technology.

See our latest analysis for GSI Technology

Comparing GSI Technology, Inc.'s CEO Compensation With the industry

Our data indicates that GSI Technology, Inc. has a market capitalization of US$154m, and total annual CEO compensation was reported as US$843k for the year to March 2020. That's a notable decrease of 19% on last year. Notably, the salary which is US$431.9k, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$1.8m. In other words, GSI Technology pays its CEO lower than the industry median. Furthermore, Lee-Lean Shu directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2020

2019

Proportion (2020)

Salary

US$432k

US$419k

51%

Other

US$411k

US$627k

49%

Total Compensation

US$843k

US$1.0m

100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. GSI Technology pays out 51% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ceo-compensation

A Look at GSI Technology, Inc.'s Growth Numbers

Over the last three years, GSI Technology, Inc. has shrunk its earnings per share by 36% per year. In the last year, its revenue is down 31%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has GSI Technology, Inc. Been A Good Investment?

Given the total shareholder loss of 2.8% over three years, many shareholders in GSI Technology, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Lee-Lean is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for GSI Technology (1 is a bit unpleasant!) that you should be aware of before investing here.

Important note: GSI Technology 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.

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. 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.

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