Should You Worry About Aehr Test Systems's (NASDAQ:AEHR) CEO Pay?

Gayn Erickson has been the CEO of Aehr Test Systems (NASDAQ:AEHR) since 2012. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Aehr Test Systems

How Does Gayn Erickson's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Aehr Test Systems has a market cap of US$38m, and is paying total annual CEO compensation of 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 looked at a group of companies with market capitalizations under US$200m, and the median CEO compensation was US$301k.

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 get a better idea of how generous the pay is by looking at the performance of the underlying business. So this freereport on the analyst consensus forecasts could help you make a master move on this stock.

The graphic below shows how CEO compensation at Aehr Test Systems has changed from year to year.

Is Aehr Test Systems Growing?

On average over the last three years, Aehr Test Systems has grown earnings per share (EPS) by 51% each year. 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. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.

Has Aehr Test Systems Been A Good Investment?

Given the total loss of 13% over three years, many shareholders in Aehr Test Systems are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Aehr Test Systems with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Aehr Test Systems shares (free trial).

If you want to buy a stock that is better than Aehr Test Systems, this freelist of high return, low debt companies is a great place to look.

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 editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.