Yahoo Finance This Is Why Rapid7, Inc.'s (NASDAQ:RPD) CEO Compensation Looks Appropriate
Key Insights
Rapid7 to hold its Annual General Meeting on 13th of June
Salary of US$443.0k is part of CEO Corey Thomas's total remuneration
The total compensation is 49% less than the average for the industry
Over the past three years, Rapid7's EPS grew by 1.1% and over the past three years, the total loss to shareholders 58%
The performance at Rapid7, Inc. (NASDAQ:RPD) has been rather lacklustre of late and shareholders may be wondering what CEO Corey Thomas is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 13th of June. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.
See our latest analysis for Rapid7
Comparing Rapid7, Inc.'s CEO Compensation With The Industry
According to our data, Rapid7, Inc. has a market capitalization of US$2.2b, and paid its CEO total annual compensation worth US$3.1m over the year to December 2023. Notably, that's a decrease of 63% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$443k.
For comparison, other companies in the American Software industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$6.2m. This suggests that Corey Thomas is paid below the industry median. Moreover, Corey Thomas also holds US$23m worth of Rapid7 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$443k | US$443k | 14% |
Other | US$2.7m | US$8.0m | 86% |
Total Compensation | US$3.1m | US$8.4m | 100% |
On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that Rapid7 allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Rapid7, Inc.'s Growth Numbers
Over the past three years, Rapid7, Inc. has seen its earnings per share (EPS) grow by 1.1% per year. It achieved revenue growth of 12% over the last year.
We think the revenue growth is good. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Rapid7, Inc. Been A Good Investment?
Few Rapid7, Inc. shareholders would feel satisfied with the return of -58% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
The fact that shareholders are sitting on a loss is certainly disheartening. Perhaps the poor price performance may have something to do with the the fact that earnings per share growth has not been performing as strongly either. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Rapid7 (1 is significant!) that you should be aware of before investing here.
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.
