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It would be hard to discount the role that CEO Rick Wallace has played in delivering the impressive results at KLA Corporation (NASDAQ:KLAC) recently. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 03 November 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.
How Does Total Compensation For Rick Wallace Compare With Other Companies In The Industry?
Our data indicates that KLA Corporation has a market capitalization of US$52b, and total annual CEO compensation was reported as US$14m for the year to June 2021. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$975k.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$13m. From this we gather that Rick Wallace is paid around the median for CEOs in the industry. What's more, Rick Wallace holds US$22m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. KLA pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at KLA Corporation's Growth Numbers
KLA Corporation's earnings per share (EPS) grew 39% per year over the last three years. In the last year, its revenue is up 19%.
Overall this is a positive result for shareholders, showing that the company has improved in recent 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 295%, 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.
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for KLA that investors should look into moving forward.
Important note: KLA is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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