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Steve Sanghi became the CEO of Microchip Technology Incorporated (NASDAQ:MCHP) in 1991. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Steve Sanghi's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Microchip Technology Incorporated has a market cap of US$21b, and is paying total annual CEO compensation of US$7.9m. (This number is for the twelve months until March 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$740k. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Most shareholders would consider it a positive that Steve Sanghi takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Microchip Technology has changed from year to year.
Is Microchip Technology Incorporated Growing?
Over the last three years Microchip Technology Incorporated has grown its earnings per share (EPS) by an average of 7.3% per year (using a line of best fit). It achieved revenue growth of 34% over the last year.
It's hard to interpret the strong revenue growth as anything other than a positive. With that in mind, the modestly improving EPS seems positive. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Shareholders might be interested in this free visualization of analyst forecasts.
Has Microchip Technology Incorporated Been A Good Investment?
Boasting a total shareholder return of 85% over three years, Microchip Technology Incorporated has done well by shareholders. 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.
It looks like Microchip Technology Incorporated pays its CEO less than the average at large companies.
Steve Sanghi is paid less than what is normal at large companies, and the total shareholder return has been pleasing over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. So you may want to check if insiders are buying Microchip Technology shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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 email@example.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.