In 2012 Gayn Erickson was appointed CEO of Aehr Test Systems (NASDAQ:AEHR). First, this article will compare CEO compensation with compensation at similar sized 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Gayn Erickson’s Compensation Compare With Similar Sized Companies?
According to our data, Aehr Test Systems has a market capitalization of US$42m, and pays its CEO total annual compensation worth US$452k. (This figure is for the year to 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$288k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO compensation to be US$293k.
Thus we can conclude that Gayn Erickson receives more in total compensation than the median of a group of companies in the same market, and of similar size to Aehr Test Systems. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Aehr Test Systems has changed over time.
Is Aehr Test Systems Growing?
Aehr Test Systems has increased its earnings per share (EPS) by an average of 51% a year, over the last three years It achieved revenue growth of 33% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has Aehr Test Systems Been A Good Investment?
With a three year total loss of 1.1%, Aehr Test Systems would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared total CEO remuneration at Aehr Test Systems with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shareholders may want to check for free if Aehr Test Systems insiders are buying or selling shares.
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.