In 2006 Rick Wallace was appointed CEO of KLA Corporation (NASDAQ:KLAC). First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Rick Wallace's Compensation Compare With Similar Sized Companies?
Our data indicates that KLA Corporation is worth US$24b, and total annual CEO compensation is US$12m. (This number is for the twelve months until June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$900k. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
So Rick Wallace is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at KLA has changed from year to year.
Is KLA Corporation Growing?
KLA Corporation has increased its earnings per share (EPS) by an average of 17% a year, over the last three years (using a line of best fit). It achieved revenue growth of 13% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has KLA Corporation Been A Good Investment?
I think that the total shareholder return of 132%, over three years, would leave most KLA Corporation shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
Rick Wallace is paid around the same as most CEOs of large companies.
The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling KLA (free visualization of insider trades).
Important note: KLA may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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