Corey Thomas has been the CEO of Rapid7, Inc. (NASDAQ:RPD) since 2012, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Rapid7.
How Does Total Compensation For Corey Thomas Compare With Other Companies In The Industry?
Our data indicates that Rapid7, Inc. has a market capitalization of US$3.0b, and total annual CEO compensation was reported as US$5.6m for the year to December 2019. Notably, that’s an increase of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$375k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.1m. So it looks like Rapid7 compensates Corey Thomas in line with the median for the industry. Moreover, Corey Thomas also holds US$21m worth of Rapid7 stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. It’s interesting to note that Rapid7 allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Rapid7, Inc.’s Growth
Rapid7, Inc. has reduced its earnings per share by 4.4% a year over the last three years. In the last year, its revenue is up 32%.
The reduction in earnings, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It’s hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what’s coming up next but if you want to peer into the company’s future you might be interested in this free visualization of analyst forecasts.
Has Rapid7, Inc. Been A Good Investment?
We think that the total shareholder return of 292%, over three years, would leave most Rapid7, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we noted earlier, Rapid7 pays its CEO in line with similar-sized companies belonging to the same industry. The company has logged solid shareholder returns for the past three years. Revenues have also showed some positive momentum, recently. On a worrying note, its important to acknowledge that EPS growth has been negative recently. Considering overall performance, it’s fair to say Corey is paid reasonably.
CEO compensation can have a massive impact on performance, but it’s just one element. That’s why we did some digging and identified 2 warning signs for Rapid7 that you should be aware of before investing.
Important note: Rapid7 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.
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This article by Simply Wall St is general in nature. 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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