Luis Müller
COHUAbout Luis Müller
Luis A. Müller is President and CEO of Cohu, Inc., and has served as a director since 2014; he is age 55 and has been CEO since December 28, 2014 . Under his leadership, Cohu navigated an extended semiconductor downcycle in 2024 with net sales of $401.8M, non-GAAP gross margin of 45.0%, remained cash-flow positive, retired its term loan B, returned $26.9M via buybacks, and ended with net cash of $5.42 per share . Pay-for-performance linkage is explicit: short-term incentives for 2024 paid zero given performance below targets, and long-term PSUs remain earned solely on relative TSR vs. Russell 2000, with 2022 PSU tranche paying at 40.3% of target based on three-year TSR . In the SEC “pay vs performance” table, cumulative TSR was 120.65 for Cohu vs 206.70 for the peer group in 2024; net income was -$9.1M and non-GAAP pretax income was 0.0% of sales .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cohu – Semiconductor Equipment Group (SEG) | President | 2011–2014 | Led SEG prior to CEO appointment; operational leadership in semicap equipment . |
| Cohu – Rasco GmbH | Managing Director | 2009–2011 | Managed European operations; international footprint . |
| Cohu – Delta Design High Speed Handling Group | Vice President | 2008–2009 | Advanced handling technology capability . |
| Cohu – Delta Design | Director of Engineering | 2005–2008 | Drove engineering initiatives in test handling . |
| Teradyne Inc. | Engineering & Business Development management | ~1996–2005 | Built core semicap expertise in ATE; commercial leadership . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Celestica Inc. | Director | Aug 2021–present | Broadened manufacturing/EMS perspective; board oversight experience . |
Board Governance
- Board service: Director since 2014; non-independent as CEO .
- Committee roles: Not listed as a member of Audit, Compensation, or Nominating & Governance committees; employee directors do not receive director cash compensation .
- Leadership structure: CEO and Chair separated; James A. Donahue serves as non-executive Chair; Lead Independent Director (Steven J. Bilodeau) provides oversight and runs executive sessions held at least three times per year .
- Dual-role implications: Separation of CEO and Chair mitigates concentration of power; presence of a Lead Independent Director and independent committees supports independence .
Fixed Compensation
| Year | Base Salary ($) | Target STI (% of salary) | Non-Equity Incentive Paid ($) | Perquisites (Auto Allowance) ($) | Total SCT Compensation ($) |
|---|---|---|---|---|---|
| 2022 | 667,307 | 110% | 1,303,528 | 9,000 | 5,315,286 |
| 2023 | 708,846 | 110% | 752,378 | 9,000 | 6,536,607 |
| 2024 | 715,000 | 110% | 0 | 9,000 | 4,831,084 |
Notes:
- 2024 base salaries unchanged across NEOs due to continuing softness; CEO salary held flat .
- No 2024 cash bonus given STI metrics underperformed targets .
Performance Compensation
Annual Short-Term Incentive (STI) – FY 2024
| Metric | Weighting | Threshold | Target | Maximum | Actual | Payout | Vesting/Payment |
|---|---|---|---|---|---|---|---|
| 4-year Rolling Sales Growth | 30% | 0% | 5% | >10% | -7.9% | 0.0% | Cash; none paid |
| Non-GAAP Pre-tax Income (% of sales) | 70% | <5% | 15% | >22.5% | -0.0% | 0.0% | Cash; none paid |
2025 STI adds one-year sales growth metric (25% weight) alongside the four-year metric (25%), with 50% weight on non-GAAP pretax income; targets unchanged .
Long-Term Incentive (LTI) – Equity Mix and 2024 Grants
- Mix: 60% PSUs (performance-based) and 40% RSUs (time-based) for CEO and NEOs .
- 2024 Grants (March 12, 2024):
- RSUs: 49,443 units; grant-date fair value $1,573,276 .
- PSUs (target): 74,165 units; grant-date fair value $2,518,643 .
- PSU design (2024 awards):
- Metric: Relative TSR vs Russell 2000 (RUT) over three fiscal years .
- Earned range: 0–200% of target; if both Cohu and RUT TSR are negative, earn no more than 100% .
- Vesting: 100% on the third anniversary of grant date .
- Realized vesting (2024): 77,096 shares vested for CEO; gross value $2,415,862; 35,363 shares withheld for taxes .
PSU Outcomes (Prior Cycle)
| PSU Grant Year | Performance Period | Earned (% of Target) | Basis |
|---|---|---|---|
| 2022 | FY2022–FY2024 | 40.3% | Two-times spread between Cohu TSR and RUT; 3-year TSR result 29.9% . |
Equity Ownership & Alignment
Beneficial Ownership (as of March 21, 2025)
| Holder | Shares Beneficially Owned | Common Stock Equivalents | Total |
|---|---|---|---|
| Luis A. Müller | 430,621 | – | 430,621 |
- Stock ownership policy: CEO must hold stock equal to 3x annual base salary; all NEOs were compliant as of Dec 31, 2024 .
- Hedging/pledging: No pledging disclosures noted; policy restricts sales before meeting guidelines and limits post-compliance reductions without committee approval .
Outstanding Equity Awards (as of Dec 28, 2024)
| Grant Date | Unvested RSUs (#) | Market Value ($) | Unearned PSUs at Target (#) | Market/Payout Value ($) |
|---|---|---|---|---|
| 3/15/2021 | 7,151 | 191,861 | – | – |
| 3/14/2022 | 27,422 | 735,732 | 54,844 | 1,471,465 |
| 3/14/2023 | 33,003 | 885,470 | 66,006 | 1,770,941 |
| 3/12/2024 | 49,443 | 1,326,556 | 74,165 | 1,989,847 |
Notes:
- RSUs granted in 2024 vest ratably over three years; RSUs granted in 2023 or earlier vest over four years .
- No stock options granted to NEOs during the three-year period ended 2024; none exercised in 2024 .
Employment Terms
Severance and Change-in-Control Economics
| Agreement Type | Salary Multiplier | Target Bonus Multiplier | COBRA Premium Payment Period | Equity Vesting |
|---|---|---|---|---|
| Severance (no CIC; CEO) | 150% | – | 18 months | No acceleration (per Severance Agreement) . |
| Change-in-Control (Double Trigger) | 200% salary | 200% target bonus | 24 months | Unvested awards vest in full upon qualifying termination; 2025 grants accelerate only if not assumed/substituted; PSUs accelerate at greater of target or performance-to-date if not reasonably assumable . |
- Term and auto-renewal: Agreements had a three-year initial term and automatically extended for two years starting Sept 8, 2023, absent notice .
- Estimated payments (as of Dec 28, 2024):
- CIC + qualifying termination: Total $12,256,488; comprising severance $3,003,000, annual bonus $786,500, medical benefits $95,116, and RSUs/PSUs $8,371,872 .
- Qualifying termination not in connection with CIC: Total $1,143,837; comprising severance $1,072,500 and medical benefits $71,337 .
- Clawback policy: Adopted Oct 2, 2023 to comply with Exchange Act Rule 10d-1 and Nasdaq standards .
- Tax gross-ups: Company does not provide 280G/4999 excise tax gross-ups .
- Employment agreements: None for NEOs; severance/CIC coverage via standard agreements .
Compensation Structure Analysis
- Equity-heavy plan with explicit performance linkage: 60% PSUs based on three-year RTSR vs RUT, 40% RSUs time-based; no options granted in last three years, indicating shift to full-value equity reducing risk vs options .
- Variable pay adjusts with performance: 2024 STI paid 0% given below-target sales growth and profitability; prior years showed payouts ranging 0%–193% of target, indicating sensitivity to business cycles .
- Governance discipline: Independent Compensation Committee; uses median market data and external consultant analyses (Compensia), monitors dilution, and removed prior guaranteed PSU minimums starting 2021 .
Say-on-Pay & Peer Benchmarking
- Say-on-Pay approval: 99.1% support at 2024 annual meeting, next advisory vote expected 2026 .
- Compensation peer inputs: Comparative TSR peer index used in pay vs performance table includes Advanced Energy, Axcelis, FormFactor, Kulicke & Soffa, Onto Innovation, Veeco, and others; market data assessed to median in equity grant sizing .
Performance & Track Record
- 2024 highlights: Despite downcycle, maintained ~45% non-GAAP gross margin, generated operating cash, delevered, repurchased $26.9M in stock, and announced AI-oriented Tignis acquisition .
- Rel TSR orientation: PSU outcomes tied to multi-year stock performance; 2022 tranche earned 40.3% .
Investment Implications
- Alignment: Strong pay-for-performance alignment with zero STI payout in 2024 and PSU-heavy LTI design; CEO compliant with 3x salary ownership guideline; clawback in place; no 280G/4999 gross-ups .
- Retention and selling pressure: Large unvested RSU/PSU overhang (RSUs 116,019 units; PSUs 195,015 units at target) creates predictable vesting-related supply, with shares withheld for taxes (35,363 in 2024) reducing gross flow-through; double-trigger CIC provides security while limiting windfalls for assumed awards .
- Risk/Red flags: No mention of pledging; no options or repricings; separation of Chair and CEO plus Lead Independent Director mitigates dual-role concerns; independent comp committee governance; however, three-year TSR underperformed peer index in 2024 pay vs performance context, which could pressure PSU outcomes .
- Trading signals: PSU earnout sensitivity to relative TSR implies equity outcomes are leveraged to stock vs Russell 2000; lack of STI payout underscores cyclical exposure. High say-on-pay support (~99%) reduces governance overhang .
References