Steve Sanghi
MICROCHIP TECHNOLOGYAbout Steve Sanghi
Steve Sanghi (age 69) is Chair of the Board, CEO and President of Microchip Technology (MCHP). He re-assumed the CEO/President roles on November 18, 2024 after serving as Executive Chair since March 2021 and Chair since 1993; he was also CEO from 1991–2021 and President from 1990–2016 . Education: M.S. Electrical & Computer Engineering (University of Massachusetts) and B.S. Electronics & Communication (Punjab University) . Fiscal 2025 context: net sales were $4.40B amid an industry downturn, and management outlined a 9‑point plan, including targets of 65% gross and 40% operating margins long term; non-GAAP operating income in FY25 was $1,078M and GAAP net income was approximately $(0.5)M; company TSR (indexed to $100 in 2020) was 155.82 vs peer group 301.01 in FY25 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Microchip Technology | Chair of the Board, CEO and President | Nov 2024–Present | Returned as CEO; launched 9‑point plan (manufacturing consolidation, working capital, portfolio realignment); targets include 65% GM and 40% OM long term . |
| Microchip Technology | Executive Chair | Mar 2021–Aug 2024 | Board leadership continuity, strategy oversight . |
| Microchip Technology | Chair of the Board | 1993–Mar 2021 | Oversight during multi-decade growth and profitability . |
| Microchip Technology | CEO | 1991–Mar 2021 | Led long-term value creation and market share gains . |
| Microchip Technology | President | 1990–2016 | Executive leadership across scaling phases . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Intel Corporation | Director | 2024–Present | Current public company directorship . |
| Impinj, Inc. | Board Chair | 2021–Present | Current public company directorship . |
| Mellanox Technologies Ltd. | Director | 2018–2020 | Prior public board . |
| Myomo, Inc. | Director | 2017–2019 | Prior public board (disclosed in 2024 proxy) . |
Fixed Compensation
Multi-year CEO compensation (fiscal years end March 31):
| Year | Salary ($) | Bonus ($) | Stock Awards ($) | Non-Equity Incentive ($) | All Other Comp ($) | Director Fees ($) | Total ($) |
|---|---|---|---|---|---|---|---|
| 2025 | 398,525 | — | 20,961,651 | — | 18,077 | 36,278 | 21,414,531 |
| 2024 | 398,678 | 14,209 | 2,921,906 | 446,389 | 15,732 | — | 3,796,914 |
| 2023 | 484,886 | 54,633 | 6,374,625 | 1,704,538 | 21,813 | — | 8,640,495 |
Additional details:
- Base salary set at $957,443 upon CEO appointment effective Nov 18, 2024; subject to an across-the-board 20% executive salary reduction in place through Mar 31, 2025 .
- CEO pay ratio FY25: CEO annualized total compensation $23,925,160; worldwide median employee $52,376; ratio 457:1 (U.S.-based median $103,161; ratio 232:1) .
Performance Compensation
Quarterly Management Incentive Compensation Plan (MICP) FY25: no payout in any quarter due to performance vs targets . Targets and actuals:
| Metric | Weight Q1 | Target Q1 | Actual Q1 | Payout Q1 | Weight Q2 | Target Q2 | Actual Q2 | Payout Q2 | Weight Q3 | Target Q3 | Actual Q3 | Payout Q3 | Weight Q4 | Target Q4 | Actual Q4 | Payout Q4 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sequential net sales growth | 20% | 1.50% | (6.37)% | 0% | 20% | 3.50% | (6.24)% | 0% | 20% | 3.50% | (11.84)% | 0% | 20% | 3.50% | (5.41)% | 0% |
| Non-GAAP gross profit % | 15% | 65.50% | 59.90% | 0% | 15% | 63.50% | 59.54% | 0% | 15% | 63.50% | 55.44% | 0% | 15% | 63.50% | 51.99% | 0% |
| Non-GAAP OpEx % of sales | 15% | 23.00% | 28.43% | 0% | 15% | 25.50% | 30.25% | 0% | 15% | 25.50% | 34.91% | 0% | 15% | 25.50% | 37.97% | 0% |
| Non-GAAP OpInc % of sales | 15% | 42.50% | 31.46% | 0% | 15% | 38.00% | 29.29% | 0% | 15% | 38.00% | 20.53% | 0% | 15% | 38.00% | 14.02% | 0% |
| Non-GAAP diluted EPS | 15% | $0.52 | $0.53 | 0% | 15% | $0.43 | $0.46 | 0% | 15% | $0.30 | $0.20 | 0% | 15% | $0.10 | $0.11 | 0% |
| Discretionary (non-ESG) | 15% | N/A | N/A | 0% | 15% | N/A | N/A | 0% | 15% | N/A | N/A | 0% | 20% | N/A | N/A | 0% |
| Discretionary ESG | 5% | N/A | N/A | 0% | 5% | N/A | N/A | 0% | 5% | N/A | N/A | 0% | 0% | N/A | N/A | 0% |
Other incentive mechanics:
- CEO MICP participation set at 200% of base salary starting Nov 2024; however, FY25 had 0% payout across all quarters .
- Evergreen equity: since Q4 FY20, 50% of evergreen awards are PSUs tied to 12-quarter non-GAAP operating income as % of sales; remaining 50% are time-based RSUs with ~4-year vesting .
- In connection with his CEO appointment, Sanghi received time-based RSUs totaling 392,408 shares (grant made January 2025 per CEO pay ratio narrative); vesting is typically approximately four years from grant (around January 2029), subject to continued service .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 10,171,819 shares (1.88% of outstanding as of June 20, 2025) . |
| Ownership breakdown | 4,255,263 shares via The Sanghi Trust; 5,905,872 via The Sanghi Family Limited Partnership; 10,684 RSUs vest within 60 days of June 20, 2025 . |
| Options | Microchip has not granted options since September 2015 (equity uses RSUs/PSUs) . |
| Stock ownership guidelines | CEO: 4x salary or 50,000 shares; Executive Chair: 3.5x salary or 40,000 shares; all executives and directors were in compliance in FY25 . |
| Pledging/hedging | Prohibited by insider trading policy; also disallows short sales and derivatives on MCHP stock . |
| Alignment signals | Large long-held stake and policy prohibitions; RSUs vest over ~4 years; near-term vest within 60 days: 10,684 shares . |
Employment Terms
- Appointment, salary, and bonus: Elected interim CEO/President effective Nov 18, 2024; base salary $957,443; MICP target 200% of salary; salary was reduced by 20% through Mar 31, 2025 under company-wide program .
- Employment contracts and severance: No employment contract or severance arrangement for the CEO; change-of-control severance agreements cover certain other executives (18 months salary, 150% of highest annual incentive in last 3 years, 18 months COBRA, double-trigger equity acceleration), but CEO has no such amounts disclosed .
- Clawback: Adopted Nasdaq-compliant incentive compensation recovery policy in Oct 2023 .
- Equity plan change-of-control: Awards assumed/substituted by acquirer; if not, vesting accelerates 100% (no single-trigger if assumed) .
- Anti-hedging/pledging, minimum vesting: Hedging and pledging prohibited; equity plan has a one-year minimum vest on at least 95% of awards (limited exceptions) .
Board Governance
- Board service history and roles: Director since August 1990; Chair since 1993 (Executive Chair 2021–Aug 2024); currently Chair, CEO and President (dual role) .
- Committee memberships: Sanghi is not on standing committees; Audit, Compensation, Nominating committees are fully independent .
- Independence and structure: 83% of nominees are independent; Lead Independent Director (Matthew W. Chapman) appointed Nov 2024 with defined authorities; independence requirement of at least 75% .
- Board meetings: 17 meetings in FY25; near-full attendance; committees met 32 times .
- Director compensation (for non-employee service): Annual retainer $100,000; Lead Independent Director +$30,000; Committee chairs +$30,000 (Audit), +$20,000 (Compensation), +$10,000 (Nominating); fees reduced 20% Feb 19, 2024–Mar 31, 2025 and reimbursed thereafter; Sanghi received $36,278 for non-employee director service between Aug 20–Nov 18, 2024 .
Director Compensation (Board-level)
| Component | Amount/Practice |
|---|---|
| Base cash retainer | $100,000 annually (non-employee directors) . |
| Lead Independent Director fee | +$30,000 annually . |
| Chair (if non-employee) | +$50,000 annually . |
| Committee chair fees | Audit $30,000; Compensation $20,000; Nominating $10,000 annually . |
| Equity | Annual RSUs sized at $200,000 grant-date value; pro-rated for new directors; one-year vest; acceleration on retirement/non-reelection within one year . |
| FY24–FY25 fee reductions | 20% reduction from Feb 19, 2024 through Mar 31, 2025; reimbursed at FY25 year-end . |
SAY-ON-PAY & Shareholder Feedback
- Say-on-Pay support: 94.22% approval at Aug 20, 2024 Annual Meeting .
- Engagement: Board reports regular investor engagement on strategy, compensation, governance, and ESG .
Compensation Structure Analysis
- Mix and risk: Emphasis on performance-based pay; quarterly MICP with financial metrics; 50% of evergreen equity in PSUs tied to sustained operating margin performance; FY25 paid 0% due to underperformance .
- One-time CEO equity: Significant time-based RSU grant (392,408 shares) upon CEO re-appointment creates a multi-year retention hook; typical ~4-year vesting schedule .
- Governance features: Clawback, one-year minimum vesting, anti-hedging/pledging, no option repricing, and no excise tax gross-ups under new CoC forms; CEO lacks guaranteed severance, constraining fixed obligations .
Performance & Track Record
- Operating backdrop FY25: “Multi-year lows” in revenue, margins, and cash flow amid industry inventory correction; implemented 9‑point plan (manufacturing/fab closure, 10% workforce reduction, working capital and leverage actions) and targeted long-term non-GAAP model of 65% gross margin and 40% operating margin .
- Selected company metrics: FY25 net sales $4.40B; Pay-versus-Performance shows FY25 non-GAAP operating income $1,078M and company TSR value 155.82 vs peer index 301.01 (indexed from $100 in 2020); GAAP net income approximately $(0.5)M .
- Strategic emphasis: Portfolio realignment toward AI and expanded networking/connectivity; PIC64 and 10BASE‑T1S platforms; refocused distribution and customer relationships .
Equity Award Detail (Context)
| Executive | FY25 Time-based RSUs (approx. 4-yr vest) | FY25 PSUs (metric and tenor) |
|---|---|---|
| Steve Sanghi | 392,408 shares; grant in January 2025; time-based vesting typical ~4 years | N/A to this grant; evergreen PSU program uses non-GAAP operating income as % of sales over 12 quarters . |
Related Party Transactions; Compliance
- No related-party transactions in FY25 .
- Section 16(a) compliance: All filings timely for FY25 per company review .
Investment Implications
- Alignment vs. dilution: Sanghi’s 1.88% stake and anti-pledging/hedging policy align with shareholders; the one-time 392k RSU grant creates a 2029 vesting overhang but also a retention and performance horizon; options are not used, limiting leverage risk .
- Pay-for-performance signal: Zero MICP payouts across FY25 and prior salary cuts indicate downside pay sensitivity to operating performance; pay governance (clawback, min vest, no repricing) reduces risk of value transfer in underperformance periods .
- Retention/CoC economics: Absence of CEO severance/CoC benefits reduces parachute risk and preserves board flexibility in a transition, but may modestly raise CEO retention risk if external opportunities arise; other executives have market-standard double-trigger CoC terms .
- Governance of combined roles: CEO/Chair consolidation elevates key-person and oversight risk; presence and defined authorities of a Lead Independent Director, high board independence, and active committees provide structural mitigants investors should monitor in execution of the 9‑point plan .
- Trading watchpoints: Near-term RSU releases are modest (10,684 shares vest within 60 days of June 20, 2025); the January 2025 CEO grant is the larger future vesting catalyst (~4 years), which could introduce episodic selling pressure at vest if not 10b5‑1 managed .