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Is Monolithic Power Systems, Inc. (NASDAQ:MPWR) Overpaying Its CEO?

Simply Wall St

In 1997 Michael Hsing was appointed CEO of Monolithic Power Systems, Inc. (NASDAQ:MPWR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Monolithic Power Systems

How Does Michael Hsing's Compensation Compare With Similar Sized Companies?

According to our data, Monolithic Power Systems, Inc. has a market capitalization of US$6.3b, and pays its CEO total annual compensation worth US$12m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$644k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.9m.

As you can see, Michael Hsing is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Monolithic Power Systems, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Monolithic Power Systems, below.

NasdaqGS:MPWR CEO Compensation, August 5th 2019

Is Monolithic Power Systems, Inc. Growing?

On average over the last three years, Monolithic Power Systems, Inc. has grown earnings per share (EPS) by 29% each year (using a line of best fit). Its revenue is up 15% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Monolithic Power Systems, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Monolithic Power Systems, Inc. for providing a total return of 107% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared total CEO remuneration at Monolithic Power Systems, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Monolithic Power Systems insiders are buying or selling shares.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.