Increases to CEO Compensation Might Be Put On Hold For Now at Richardson Electronics, Ltd. (NASDAQ:RELL)

Key Insights

• Richardson Electronics will host its Annual General Meeting on 10th of October
• Salary of US$880.4k is part of CEO Edward Richardson's total remuneration
• The overall pay is 86% above the industry average
• Richardson Electronics' EPS grew by 97% over the past three years while total shareholder return over the past three years was 169%

CEO Edward Richardson has done a decent job of delivering relatively good performance at Richardson Electronics, Ltd. (NASDAQ:RELL) recently. As shareholders go into the upcoming AGM on 10th of October, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Richardson Electronics

How Does Total Compensation For Edward Richardson Compare With Other Companies In The Industry?

Our data indicates that Richardson Electronics, Ltd. has a market capitalization of US$154m, and total annual CEO compensation was reported as US$1.7m for the year to May 2023. Notably, that's an increase of 26% over the year before. We note that the salary of US$880.4k makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the American Electronic industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$927k. Hence, we can conclude that Edward Richardson is remunerated higher than the industry median. Moreover, Edward Richardson also holds US$22m worth of Richardson Electronics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$880k	US$845k	51%
Other	US$845k	US$524k	49%
Total Compensation	US$1.7m	US$1.4m	100%

Speaking on an industry level, nearly 33% of total compensation represents salary, while the remainder of 67% is other remuneration. It's interesting to note that Richardson Electronics pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Richardson Electronics, Ltd.'s Growth Numbers

Richardson Electronics, Ltd. has seen its earnings per share (EPS) increase by 97% a year over the past three years. Its revenue is up 17% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Richardson Electronics, Ltd. Been A Good Investment?

We think that the total shareholder return of 169%, over three years, would leave most Richardson Electronics, Ltd. shareholders smiling. 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.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which is a bit unpleasant) in Richardson Electronics we think you should know about.

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. 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.