We Think K2 F&B Holdings Limited's (HKG:2108) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• K2 F&B Holdings to hold its Annual General Meeting on 27th of June
• Total pay for CEO Zhu Zhiqiang Chu includes S$660.0k salary
• The overall pay is 122% above the industry average
• K2 F&B Holdings' three-year loss to shareholders was 4.5% while its EPS was down 15% over the past three years

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Shareholders will probably not be too impressed with the underwhelming results at K2 F&B Holdings Limited (HKG:2108) recently. At the upcoming AGM on 27th of June, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for K2 F&B Holdings

Comparing K2 F&B Holdings Limited's CEO Compensation With The Industry

Our data indicates that K2 F&B Holdings Limited has a market capitalization of HK$168m, and total annual CEO compensation was reported as S$924k for the year to December 2024. That's mostly flat as compared to the prior year's compensation. In particular, the salary of S$660.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Hospitality industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of S$416k. This suggests that Zhu Zhiqiang Chu is paid more than the median for the industry. What's more, Zhu Zhiqiang Chu holds HK$126m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. K2 F&B Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at K2 F&B Holdings Limited's Growth Numbers

Over the last three years, K2 F&B Holdings Limited has shrunk its earnings per share by 15% per year. Its revenue is up 2.6% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has K2 F&B Holdings Limited Been A Good Investment?

Since shareholders would have lost about 4.5% over three years, some K2 F&B Holdings Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for K2 F&B Holdings you should be aware of, and 1 of them is significant.

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.

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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.