Shareholders May Be Wary Of Increasing Kinetix Systems Holdings Limited's (HKG:8606) CEO Compensation Package

Key Insights

• Kinetix Systems Holdings will host its Annual General Meeting on 27th of June
• CEO Larry Yu's total compensation includes salary of HK$960.0k
• The total compensation is similar to the average for the industry
• Kinetix Systems Holdings' three-year loss to shareholders was 89% while its EPS was down 63% over the past three years

The results at Kinetix Systems Holdings Limited (HKG:8606) have been quite disappointing recently and CEO Larry Yu bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Kinetix Systems Holdings

Comparing Kinetix Systems Holdings Limited's CEO Compensation With The Industry

Our data indicates that Kinetix Systems Holdings Limited has a market capitalization of HK$101m, and total annual CEO compensation was reported as HK$975k for the year to December 2023. This means that the compensation hasn't changed much from last year. Notably, the salary which is HK$960.0k, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong IT industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.2m. From this we gather that Larry Yu is paid around the median for CEOs in the industry. What's more, Larry Yu holds HK$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$960k	HK$940k	98%
Other	HK$15k	HK$15k	2%
Total Compensation	HK$975k	HK$955k	100%

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. Kinetix Systems Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Kinetix Systems Holdings Limited's Growth

Kinetix Systems Holdings Limited has reduced its earnings per share by 63% a year over the last three years. In the last year, its revenue is up 4.9%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. 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 Kinetix Systems Holdings Limited Been A Good Investment?

Few Kinetix Systems Holdings Limited shareholders would feel satisfied with the return of -89% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Kinetix Systems Holdings pays its CEO a majority of compensation through a salary. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Kinetix Systems Holdings (of which 2 are significant!) that you should know about in order to have a holistic understanding of the 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. 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.

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