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Shareholders May Not Be So Generous With Rambus Inc.'s (NASDAQ:RMBS) CEO Compensation And Here's Why

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CEO Luc Seraphin has done a decent job of delivering relatively good performance at Rambus Inc. (NASDAQ:RMBS) recently. As shareholders go into the upcoming AGM on 29 April 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Rambus

How Does Total Compensation For Luc Seraphin Compare With Other Companies In The Industry?

At the time of writing, our data shows that Rambus Inc. has a market capitalization of US$2.2b, and reported total annual CEO compensation of US$5.4m for the year to December 2020. We note that's an increase of 33% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$573k.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$2.7m. This suggests that Luc Seraphin is paid more than the median for the industry.

Component

2020

2019

Proportion (2020)

Salary

US$573k

US$550k

11%

Other

US$4.8m

US$3.5m

89%

Total Compensation

US$5.4m

US$4.0m

100%

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. In Rambus' 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.

ceo-compensation
ceo-compensation

A Look at Rambus Inc.'s Growth Numbers

Over the past three years, Rambus Inc. has seen its earnings per share (EPS) grow by 18% per year. In the last year, its revenue is up 8.2%.

Overall this is a positive result for shareholders, showing that the company has improved in recent 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?

We think that the total shareholder return of 45%, over three years, would leave most Rambus 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.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

Shareholders may want to check for free if Rambus insiders are buying or selling shares.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.