We Take A Look At Why Rambus Inc.'s (NASDAQ:RMBS) CEO Compensation Is Well Earned

Key Insights

• Rambus to hold its Annual General Meeting on 25th of April
• Total pay for CEO Luc Seraphin includes US$625.0k salary
• The total compensation is similar to the average for the industry
• Rambus' total shareholder return over the past three years was 190% while its EPS grew by 127% over the past three years

We have been pretty impressed with the performance at Rambus Inc. (NASDAQ:RMBS) recently and CEO Luc Seraphin deserves a mention for their role in it. Coming up to the next AGM on 25th of April, shareholders would be keeping this in mind. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

See our latest analysis for Rambus

Comparing Rambus Inc.'s CEO Compensation With The Industry

Our data indicates that Rambus Inc. has a market capitalization of US$6.1b, and total annual CEO compensation was reported as US$8.4m for the year to December 2023. Notably, that's an increase of 18% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$625k.

For comparison, other companies in the American Semiconductor industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$8.4m. So it looks like Rambus compensates Luc Seraphin in line with the median for the industry. Moreover, Luc Seraphin also holds US$15m worth of Rambus 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$625k	US$598k	7%
Other	US$7.8m	US$6.5m	93%
Total Compensation	US$8.4m	US$7.1m	100%

On an industry level, around 11% of total compensation represents salary and 89% is other remuneration. Rambus sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Rambus Inc.'s Growth Numbers

Over the past three years, Rambus Inc. has seen its earnings per share (EPS) grow by 127% per year. In the last year, its revenue is up 1.4%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Rambus Inc. Been A Good Investment?

Boasting a total shareholder return of 190% over three years, Rambus Inc. has done well by shareholders. 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.

To Conclude...

Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Rambus that investors should be aware of in a dynamic business environment.

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.