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Here's Why Aehr Test Systems' (NASDAQ:AEHR) CEO May Have Their Pay Bumped Up

·3-min read

The decent performance at Aehr Test Systems (NASDAQ:AEHR) recently will please most shareholders as they go into the AGM coming up on 19 October 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

Check out our latest analysis for Aehr Test Systems

How Does Total Compensation For Gayn Erickson Compare With Other Companies In The Industry?

According to our data, Aehr Test Systems has a market capitalization of US$504m, and paid its CEO total annual compensation worth US$485k over the year to May 2021. Notably, that's a decrease of 9.1% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$225k.

For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.5m. In other words, Aehr Test Systems pays its CEO lower than the industry median. Moreover, Gayn Erickson also holds US$8.4m worth of Aehr Test Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2021

2020

Proportion (2021)

Salary

US$225k

US$289k

47%

Other

US$259k

US$244k

53%

Total Compensation

US$485k

US$533k

100%

Speaking on an industry level, nearly 13% of total compensation represents salary, while the remainder of 87% is other remuneration. It's interesting to note that Aehr Test Systems pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

Aehr Test Systems' Growth

Over the past three years, Aehr Test Systems has seen its earnings per share (EPS) grow by 2.6% per year. It achieved revenue growth of 7.8% over the last year.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Aehr Test Systems Been A Good Investment?

Boasting a total shareholder return of 775% over three years, Aehr Test Systems 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.

In Summary...

The company's overall performance, while not bad, could be better. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Aehr Test Systems that you should be aware of before investing.

Important note: Aehr Test Systems is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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