Shareholders Will Likely Find Rapid7, Inc.'s (NASDAQ:RPD) CEO Compensation Acceptable

Key Insights

• Rapid7 to hold its Annual General Meeting on 13th of June
• CEO Corey Thomas' total compensation includes salary of US$443.0k
• The total compensation is 49% less than the average for the industry
• Rapid7's three-year loss to shareholders was 58% while its EPS grew by 1.1% over the past three years

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

Our data indicates that Rapid7, Inc. has a market capitalization of US$2.2b, and total annual CEO compensation was reported as US$3.1m for the year to December 2023. Notably, that's a decrease of 63% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, 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. Furthermore, Corey Thomas directly owns US$23m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. In Rapid7's case, non-salary compensation represents a greater slice of total remuneration, 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.

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 would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. 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 Rapid7, Inc. Been A Good Investment?

With a total shareholder return of -58% over three years, Rapid7, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The disappointing performance may have something to do with the flat earnings growth. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which can't be ignored) in Rapid7 we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.