What We Learned About KPa-BM Holdings' (HKG:2663) CEO Compensation

Yat Kin Wai became the CEO of KPa-BM Holdings Limited (HKG:2663) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for KPa-BM Holdings

Comparing KPa-BM Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that KPa-BM Holdings Limited has a market capitalization of HK$150m, and reported total annual CEO compensation of HK$5.7m for the year to March 2020. We note that's an increase of 63% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$2.7m.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.0m. Hence, we can conclude that Yat Kin Wai is remunerated higher than the industry median. What's more, Yat Kin Wai holds HK$8.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 8.7% of the pie. In KPa-BM Holdings' 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 KPa-BM Holdings Limited's Growth Numbers

Over the past three years, KPa-BM Holdings Limited has seen its earnings per share (EPS) grow by 21% per year. Its revenue is down 13% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has KPa-BM Holdings Limited Been A Good Investment?

Since shareholders would have lost about 39% over three years, some KPa-BM Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, KPa-BM Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Yat Kin is underpaid, in fact compensation is definitely on the higher side.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for KPa-BM Holdings that investors should think about before committing capital to this stock.

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. 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.
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