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Should You Worry About MACOM Technology Solutions Holdings, Inc.'s (NASDAQ:MTSI) CEO Pay Cheque?

Simply Wall St

John Croteau became the CEO of MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for MACOM Technology Solutions Holdings

How Does John Croteau's Compensation Compare With Similar Sized Companies?

According to our data, MACOM Technology Solutions Holdings, Inc. has a market capitalization of US$1.1b, and pays its CEO total annual compensation worth US$5.1m. (This number is for the twelve months until September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$673k. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.2m.

As you can see, John Croteau is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean MACOM Technology Solutions Holdings, 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 MACOM Technology Solutions Holdings, below.

NasdaqGS:MTSI CEO Compensation, April 15th 2019

Is MACOM Technology Solutions Holdings, Inc. Growing?

Over the last three years MACOM Technology Solutions Holdings, Inc. has shrunk its earnings per share by an average of 61% per year (measured with a line of best fit). It saw its revenue drop -13% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has MACOM Technology Solutions Holdings, Inc. Been A Good Investment?

Since shareholders would have lost about 60% over three years, some MACOM Technology Solutions Holdings, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount MACOM Technology Solutions Holdings, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if MACOM Technology Solutions Holdings insiders are buying or selling shares.

If you want to buy a stock that is better than MACOM Technology Solutions Holdings, this free list of high return, low debt companies is a great place to look.

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.