Corey Thomas became the CEO of Rapid7, Inc. (NASDAQ:RPD) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Corey Thomas's Compensation Compare With Similar Sized Companies?
Our data indicates that Rapid7, Inc. is worth US$2.5b, and total annual CEO compensation was reported as US$5.0m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$350k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
That means Corey Thomas receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see, below, how CEO compensation at Rapid7 has changed over time.
Is Rapid7, Inc. Growing?
Over the last three years Rapid7, Inc. has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). It achieved revenue growth of 28% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Rapid7, Inc. Been A Good Investment?
Boasting a total shareholder return of 262% over three years, Rapid7, Inc. has done well by shareholders. 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.
Corey Thomas is paid around what is normal the leaders of comparable size companies.
Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Rapid7 (free visualization of insider trades).
Important note: Rapid7 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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