Increases to CEO Compensation Might Be Put On Hold For Now at Kagome Co., Ltd. (TSE:2811)

Key Insights

• Kagome to hold its Annual General Meeting on 27th of March
• Salary of JP¥43.0m is part of CEO Satoshi Yamaguchi's total remuneration
• The total compensation is 313% higher than the average for the industry
• Kagome's EPS grew by 35% over the past three years while total shareholder loss over the past three years was 0.3%

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In the past three years, shareholders of Kagome Co., Ltd. (TSE:2811) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 27th of March. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Kagome

How Does Total Compensation For Satoshi Yamaguchi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kagome Co., Ltd. has a market capitalization of JP¥283b, and reported total annual CEO compensation of JP¥119m for the year to December 2024. We note that's an increase of 9.2% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at JP¥43m.

On comparing similar companies from the Japanese Food industry with market caps ranging from JP¥149b to JP¥476b, we found that the median CEO total compensation was JP¥29m. Hence, we can conclude that Satoshi Yamaguchi is remunerated higher than the industry median. Moreover, Satoshi Yamaguchi also holds JP¥52m worth of Kagome stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	JP¥43m	JP¥43m	36%
Other	JP¥76m	JP¥66m	64%
Total Compensation	JP¥119m	JP¥109m	100%

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. Kagome sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Kagome Co., Ltd.'s Growth

Over the past three years, Kagome Co., Ltd. has seen its earnings per share (EPS) grow by 35% per year. In the last year, its revenue is up 37%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Kagome Co., Ltd. Been A Good Investment?

Given the total shareholder loss of 0.3% over three years, many shareholders in Kagome Co., Ltd. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Kagome that investors should be aware of in a dynamic business environment.

Switching gears from Kagome, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.