Yahoo Finance Should You Worry About Micron Technology, Inc.'s (NASDAQ:MU) CEO Pay Cheque?
In 2017, Sanjay Mehrotra was appointed CEO of Micron Technology, Inc. (NASDAQ:MU). This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. 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 Micron Technology
How Does Sanjay Mehrotra's Compensation Compare With Similar Sized Companies?
According to our data, Micron Technology, Inc. has a market capitalization of US$51b, and paid its CEO total annual compensation worth US$17m over the year to August 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Micron Technology stands. On a sector level, around 16% of total compensation represents salary and 84% is other remuneration. Micron Technology sets aside a smaller share of compensation for salary, in comparison to the overall industry.
It would therefore appear that Micron Technology, Inc. pays Sanjay Mehrotra more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. The graphic below shows how CEO compensation at Micron Technology has changed from year to year.
Is Micron Technology, Inc. Growing?
Over the last three years Micron Technology, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 9.5% per year (using a line of best fit). It saw its revenue drop 35% over the last year.
I generally like to see a little revenue growth, but the improvement in EPS is good. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has Micron Technology, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Micron Technology, Inc. for providing a total return of 49% 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 examined the amount Micron Technology, Inc. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
Over the last three years returns to investors have been great, though we might have liked stronger business growth. So, considering these tasty returns, the CEO compensation may be quite appropriate. Looking into other areas, we've picked out 2 warning signs for Micron Technology that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than Micron Technology, this free list of high return, low debt companies is a great place to look.
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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. Thank you for reading.
