This Is Why Shareholders May Want To Hold Back On A Pay Rise For Kasen International Holdings Limited's (HKG:496) CEO

Key Insights

• Kasen International Holdings to hold its Annual General Meeting on 31st of May
• Salary of CN¥1.01m is part of CEO Kasen Zhu's total remuneration
• The total compensation is 53% less than the average for the industry
• Over the past three years, Kasen International Holdings' EPS fell by 14% and over the past three years, the total loss to shareholders 64%

The disappointing performance at Kasen International Holdings Limited (HKG:496) will make some shareholders rather disheartened. The next AGM coming up on 31st of May will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. The data we gathered below shows that CEO compensation looks acceptable for now.

Check out our latest analysis for Kasen International Holdings

Comparing Kasen International Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Kasen International Holdings Limited has a market capitalization of HK$397m, and reported total annual CEO compensation of CN¥1.0m for the year to December 2023. That's a notable increase of 63% on last year. We note that the salary portion, which stands at CN¥1.01m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Consumer Durables industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥2.2m. Accordingly, Kasen International Holdings pays its CEO under the industry median. Furthermore, Kasen Zhu directly owns HK$156m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.0m	CN¥617k	99%
Other	CN¥11k	CN¥11k	1%
Total Compensation	CN¥1.0m	CN¥628k	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Investors will find it interesting that Kasen International Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Kasen International Holdings Limited's Growth

Over the last three years, Kasen International Holdings Limited has shrunk its earnings per share by 14% per year. In the last year, its revenue is up 11%.

The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Kasen International Holdings Limited Been A Good Investment?

With a total shareholder return of -64% over three years, Kasen International Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Kasen International Holdings pays its CEO a majority of compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Kasen International Holdings (1 is a bit concerning!) that you should be aware of before investing here.

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. 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.