Morris S. Young
AXTAbout Morris S. Young
Morris S. Young, Ph.D., is Chairman and Chief Executive Officer of AXT, Inc. (AXTI). He co-founded AXT in 1986, has served as a director since 1989, and was reappointed CEO in 2009 and Chairman in 2021. He is 80 years old and holds a B.S. in metallurgical engineering (National Cheng Kung University), an M.S. in metallurgy (Syracuse University), and a Ph.D. in metallurgy (Polytechnic University). Prior roles include physicist at Lawrence Livermore National Laboratory (1985–1989). In 2024, AXT’s revenue grew 31% to $99.4M and gross margin improved to 24.0%, with management linking 50% of executive annual equity to revenue-based performance goals; EBITDA and net income trends are shown below for context.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| AXT, Inc. | President & CEO | 1989–2004 | Scaled compound semiconductor substrates; took company public; established industry relationships |
| AXT, Inc. | Chief Technology Officer | 2004–2006 | Technology leadership during transition period |
| AXT, Inc. | CEO | 2009–Present | Return to growth and operational repositioning; renewed equity-performance alignment |
| AXT, Inc. | Chairman of the Board | 1998–2004; 2021–Present | Governance leadership; re-combined CEO/Chair roles with Lead Independent Director oversight |
| Lawrence Livermore National Laboratory | Physicist | 1985–1989 | Advanced materials experience foundational to AXT substrates biz |
External Roles
- No current public company directorships disclosed for Dr. Young in the proxy.
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary (USD) | $479,000 | $479,000 | $479,000 |
| Target Annual Bonus (% of Salary) | Not disclosed | Not disclosed | 100% (Target $479,000) |
| Actual Cash Bonus Paid (USD) | $385,000 | $0 | $140,000 (Q1 only) |
| All Other Compensation (USD) | $37,812 | $37,812 | $37,812 |
| Total Reported Compensation (USD) | $1,416,069 | $738,166 | $920,841 |
Additional detail – 2024 quarterly cash bonus vs conversion to equity:
- Actual cash paid: Q1 $140,000; Q2–Q4 $0; total cash $140,000 (29% of target)
- “Calculated” bonus (for conversion): $389,424 total (81% of target), with Q2–Q4 converted to 4-year vesting RSAs
- Conversion share counts: Q2 39,792; Q3 22,003; Q4 33,264; total 95,059 shares; conversion prices: $3.10 (Q2), $2.46 (Q3), $2.16 (Q4)
Performance Compensation
- Annual incentive structure (2024/2025): 60% Corporate Targets + 40% Individual Targets; quarterly assessment with Board/Committee oversight. 2025 cash bonus targets were not finalized at proxy time due to U.S. tariffs and China export permit uncertainties.
| Metric | Weighting | Target | Actual/Payout | Vesting/Notes |
|---|---|---|---|---|
| Executive Incentive Plan (Cash) | 60% Corporate / 40% Individual | 2024 target bonus 100% of salary ($479,000) | 2024 actual cash paid: $140,000; remaining calculated amounts converted to RSAs | Cash for Q1; Q2–Q4 in 4-yr vesting RSAs |
| PBRSUs – 2024 Award | 50% of annual equity tied to 2024 revenue | Target revenue $85.0M with 0–200% payout schedule | 2024 revenue certified at $99.4M; 200% of target earned | Still subject to 4-year vesting; time-based vesting also applies |
| PBRSUs – 2025 Award | 50% of annual equity tied to 2025 metric (revenue framework) | Target shares: 111,795; Max: 223,590 | Not applicable yet | Subject to 4-year vesting; target determined Nov 11, 2024; performance grant dated Feb 18, 2025 |
Revenue performance grid for 2024 PBRSUs (illustrative thresholds): 0% payout ≤$72.25M up to 200% payout ≥$97.75M; target 100% at $85.0M. AXT certified $99.4M for 2024, triggering 200% payout of the performance-linked portion (still four-year vesting).
Long-term incentive design and grants:
- Since 2020, equity is primarily restricted stock: 50% time-based (4-year, 25% per year) and 50% performance-based on an annual financial metric, also subject to 4-year vesting. Annual grants made in Q4; performance tranches finalized Q1 following year.
- Selected 2024/2025 equity grants (Dr. Young): 11/11/2024 time-based 111,795 shares; 2025 performance grant (2/18/2025) target 111,795; max 223,590.
- RSAs in lieu of cash: 8/20/2024 (39,792), 10/29/2024 (22,003), 11/11/2024 (111,795).
Vesting schedules (standard):
- Options: 25% after year one, then 1/48 monthly; fully vested by year four.
- Restricted stock: 25% per year over four years.
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 2,854,589 shares (6.26% of 45,597,995 shares outstanding as of Mar 21, 2025) |
| Ownership structure | Includes 2,162,636 shares held by the Young Family Trust and the Morris Young Family Ltd. Partnership; 691,953 options exercisable within 60 days |
| Anti-hedging/pledging | Hedging, short sales, margin accounts, and pledges are prohibited under the Insider Trading Policy |
| Stock vested in 2024 | 121,075 shares vested; value realized $271,437 |
Outstanding equity at FY-end (selected Dr. Young positions):
| Grant/Instrument | Exercisable | Unexercisable | Strike | Expiry | Unvested RSAs (#) | Unvested RSAs Value |
|---|---|---|---|---|---|---|
| Stock options (10/28/2016) | 174,896 | — | $5.21 | 10/28/2026 | — | — |
| Stock options (10/27/2017) | 89,797 | — | $9.50 | 10/27/2027 | — | — |
| Stock options (11/05/2018) | 189,990 | — | $5.77 | 11/05/2028 | — | — |
| Stock options (11/06/2019) | 134,789 | 102,481 | $3.06 | 11/06/2029 | — | — |
| RSAs (various 2020–2024) | — | — | — | — | 18,855; 7,500; 28,282; 28,580; 83,846; 111,795; 39,792; 22,003; 111,795 | Values per grant at $2.17 close on 12/31/2024 shown in proxy (e.g., $242,595 for 111,795) |
Change-in-control immediate vesting value (illustrative at 12/31/2024):
- If CoC without assumption and qualifying termination: 443,168 options/shares would accelerate with a net value of $961,675 based on $2.17/share and applicable strikes.
Employment Terms
| Provision | Terms |
|---|---|
| Employment status | At-will; amended and restated CEO offer letter dated Dec 4, 2012 |
| Termination without cause (no CoC) | 12 months base salary ($479,000) plus 24 months health benefit reimbursement ($57,563) if terminated on 12/31/2024 |
| Change-of-control (definition) | Merger, consolidation, sale of substantially all assets, or transfer of beneficial ownership where pre-transaction holders own <50% post-transaction. |
| CoC termination (double-trigger) | If terminated without cause or resigns for good reason within 12 months after CoC: 18 months base salary continuation; 24 months health benefits; full vesting acceleration of outstanding equity, subject to release |
| Equity plan CoC treatment | If awards not assumed/substituted, options/RSUs vest in full; performance awards deemed at 100% unless Administrator decides otherwise [2015 Plan], with Administrator discretion (not required to treat all awards similarly) |
| Restrictive covenants | Non-compete may be required as a condition of severance: greater of 1 year from termination or 2 years from CoC date; release of claims required |
| Clawback | Company-wide clawback policy effective Nov 8, 2023; awards may be recouped for fraud, misstatement, violations, etc. |
| Tax gross-ups | None under Sections 280G/4999; no option repricing permitted under 2015 Plan |
Board Governance
- Board roles: Dr. Young is Chairman and CEO; Jesse Chen is Lead Independent Director providing counterbalance via executive sessions and authority to call meetings of independent directors. The Board determined all directors other than Dr. Young are independent.
- Committees (all independent): Audit (Chair Christine Russell), Compensation (Chair David C. Chang), Nominating & Corporate Governance (Chair Jesse Chen). 2024 meetings: Audit 11; Compensation 7; Nominating 4. Each director attended ≥75% of meetings.
- Director compensation (non-employee): $45,000 annual cash retainer; committee member retainers (Audit $10,000; Compensation $5,300; Nominating $5,000); committee chair retainers (Audit $20,000; Compensation $13,000; Nominating $10,000); Lead Independent Director retainer $13,000; annual equity grant $80,000 in RSAs (23,323 shares at $3.43 on 5/16/2024).
Compensation Committee Analysis, Peer Group, and Say-on-Pay
- Independent consultant: Compensia advises the Committee; no conflicts reported; committee targets ~50th percentile of peer group for salary, target bonus, and long-term equity.
- Peer group (16 companies): Alpha & Omega Semiconductor; Amtech Systems; Applied Optoelectronics; Cambium Networks; CEVA; EMCORE; FARO Technologies; GSI Technology; Intevac; Iteris; Kopin; PCTEL; Pixelworks; Quantum; Turtle Beach; Vishay Precision Group.
- Say-on-Pay: 92.5% approval at May 16, 2024 annual meeting; Board continued pay-for-performance emphasis.
Related Party Transactions and Red Flags
- Related parties: Audit Committee pre-approval required; none over $120,000 since Jan 1, 2024.
- Hedging/pledging: Prohibited.
- Option repricing: Not permitted under the 2015 Plan.
- 280G tax gross-ups: Not provided.
Performance & Track Record
- 2024 operational highlights: Revenue +31% to $99.4M; gross margin to 24.0%; capex reduced 68% to $5.8M; progress on 6-inch InP; expanded raw materials portfolio; China export permit processes implemented; early penetration in handset PA with GaAs substrates.
AXT financial context (annual):
| Metric (USD) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues | $141.118M* | $75.795M* | $99.361M* |
| EBITDA | $20.673M* | -$12.847M* | -$5.824M* |
| Net Income | $15.811M* | -$17.881M* | -$11.624M* |
Values retrieved from S&P Global.*
Equity Award Detail (Selected Grants and Vesting Mechanics)
| Grant Type | Date | Shares/Options | Vesting |
|---|---|---|---|
| RSA (time-based) | 11/11/2024 | 111,795 | 25% per year over 4 years |
| PBRSU (target/max) | 2/18/2025 (FY25) | 111,795 / 223,590 | Earned vs 2025 financial metric; 4-year vesting |
| PBRSU (target/max) | 2/23/2024 (FY24) | 111,795 / 223,590 | Earned 200% (revenue $99.4M), still 4-year vesting |
| RSAs in lieu of cash | 8/20/2024; 10/29/2024; 11/11/2024 | 39,792; 22,003; 111,795 | 4-year vesting; conversion prices $3.10/$2.46/$2.16 |
| Stock Options | Various 2016–2019 | 589,472 exercisable; 102,481 unexercisable (selected grants) | 25% after 1 year, then monthly; 4-year full vest |
Investment Implications
- Alignment positives: High insider ownership (6.26%) with significant exercisable options and RSAs; strict anti-hedging/pledging and a 2023 clawback underpin shareholder alignment; equity awards are 50% performance-based with 4-year vesting, and 2024 performance exceeded max revenue target, indicating goal rigor and payout discipline.
- Retention and liquidity: Q2–Q4 2024 cash bonuses were converted into multi-year RSAs (95,059 shares), lowering near-term cash comp and potentially moderating near-term selling pressure due to vesting over four years; however, 121,075 shares vested in 2024 represent a potential source of periodic liquidity.
- Governance risk and mitigation: Combined CEO/Chair role may concentrate power, but the Board maintains a Lead Independent Director, independent committees, and regular executive sessions; no related-party transactions, no option repricing, and no 280G gross-ups reduce governance risk.
- Change-in-control economics: Moderate severance (12 months salary, 24 months health) on non-CoC termination, with double-trigger CoC benefits (18 months salary, 24 months health, full vesting), and non-compete tied to severance; illustrative CoC vesting value for Dr. Young was $961,675 at 12/31/2024 price levels.
- Pay-for-performance: 2024 say-on-pay passed with 92.5% support; compensation levels targeted to the 50th percentile peer group; Committee uses independent consultant Compensia.
Bottom line: Dr. Young’s compensation features robust long-term alignment via performance-linked equity and multi-year vesting, with meaningful insider ownership and strong shareholder safeguards. Key watch items are the dual CEO/Chair role and the potential supply from annual RSA vesting cycles; performance-based equity sensitivity to revenue (particularly with China export permitting and tariff dynamics) is a primary lever for realized pay and potential insider selling cadence.