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What We Learned About Power Integrations' (NASDAQ:POWI) CEO Pay

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  • POWI

Balu Balakrishnan became the CEO of Power Integrations, Inc. (NASDAQ:POWI) in 2002, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Power Integrations.

Check out our latest analysis for Power Integrations

How Does Total Compensation For Balu Balakrishnan Compare With Other Companies In The Industry?

According to our data, Power Integrations, Inc. has a market capitalization of US$3.3b, and paid its CEO total annual compensation worth US$5.7m over the year to December 2019. Notably, that's an increase of 13% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$609k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.7m. So it looks like Power Integrations compensates Balu Balakrishnan in line with the median for the industry. What's more, Balu Balakrishnan holds US$20m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$609k

US$593k

11%

Other

US$5.1m

US$4.4m

89%

Total Compensation

US$5.7m

US$5.0m

100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. Power Integrations pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Power Integrations, Inc.'s Growth Numbers

Power Integrations, Inc. has seen its earnings per share (EPS) increase by 54% a year over the past three years. In the last year, its revenue is up 13%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Power Integrations, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Power Integrations, Inc. for providing a total return of 58% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As we touched on above, Power Integrations, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. So one could argue that CEO compensation is quite modest, if you consider company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Power Integrations (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Power Integrations, 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.

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.