Yahoo Finance Here's Why Shareholders May Want To Be Cautious With Increasing KLA Corporation's (NASDAQ:KLAC) CEO Pay Packet
Key Insights
KLA's Annual General Meeting to take place on 1st of November
Salary of US$1.00m is part of CEO Rick Wallace's total remuneration
The overall pay is 60% above the industry average
Over the past three years, KLA's EPS grew by 47% and over the past three years, the total shareholder return was 134%
Under the guidance of CEO Rick Wallace, KLA Corporation (NASDAQ:KLAC) has performed reasonably well recently. As shareholders go into the upcoming AGM on 1st of November, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.
Check out our latest analysis for KLA
Comparing KLA Corporation's CEO Compensation With The Industry
According to our data, KLA Corporation has a market capitalization of US$62b, and paid its CEO total annual compensation worth US$27m over the year to June 2023. That's a notable increase of 30% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.
On comparing similar companies in the American Semiconductor industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$17m. This suggests that Rick Wallace is paid more than the median for the industry. Furthermore, Rick Wallace directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.0m | US$997k | 4% |
Other | US$26m | US$20m | 96% |
Total Compensation | US$27m | US$21m | 100% |
On an industry level, roughly 12% of total compensation represents salary and 88% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but KLA paid Rick Wallace a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
KLA Corporation's Growth
KLA Corporation's earnings per share (EPS) grew 47% per year over the last three years. Its revenue is up 14% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has KLA Corporation Been A Good Investment?
We think that the total shareholder return of 134%, over three years, would leave most KLA Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
KLA prefers rewarding its CEO through non-salary benefits. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for KLA that investors should be aware of in a dynamic business environment.
Switching gears from KLA, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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.
