How Is Cohu's (NASDAQ:COHU) CEO Compensated?

Luis Müller has been the CEO of Cohu, Inc. (NASDAQ:COHU) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Cohu pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Cohu

Comparing Cohu, Inc.'s CEO Compensation With the industry

Our data indicates that Cohu, Inc. has a market capitalization of US$1.6b, and total annual CEO compensation was reported as US$2.5m for the year to December 2019. That's a slightly lower by 5.6% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$584k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$3.4m. So it looks like Cohu compensates Luis Müller in line with the median for the industry. Moreover, Luis Müller also holds US$7.5m worth of Cohu stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. It's interesting to note that Cohu 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.

A Look at Cohu, Inc.'s Growth Numbers

Cohu, Inc. has reduced its earnings per share by 79% a year over the last three years. It saw its revenue drop 5.8% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Cohu, Inc. Been A Good Investment?

We think that the total shareholder return of 82%, over three years, would leave most Cohu, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As previously discussed, Luis is compensated close to the median for companies of its size, and which belong to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We wouldn't say CEO compensation is too high, but shrinking EPS is undoubtedly an issue that will have to be addressed.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Cohu that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.
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