Shareholders Will Probably Hold Off On Increasing KMD Brands Limited's (NZSE:KMD) CEO Compensation For The Time Being

Key Insights

• KMD Brands' Annual General Meeting to take place on 9th of November
• Salary of NZ$1.20m is part of CEO Michael Daly's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, KMD Brands' EPS grew by 44% and over the past three years, the total loss to shareholders 15%

Shareholders of KMD Brands Limited (NZSE:KMD) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 9th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for KMD Brands

How Does Total Compensation For Michael Daly Compare With Other Companies In The Industry?

At the time of writing, our data shows that KMD Brands Limited has a market capitalization of NZ$619m, and reported total annual CEO compensation of NZ$1.3m for the year to July 2023. That's a notable decrease of 17% on last year. We note that the salary portion, which stands at NZ$1.20m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the New Zealand Specialty Retail industry with market caps ranging from NZ$338m to NZ$1.4b, we found that the median CEO total compensation was NZ$1.6m. From this we gather that Michael Daly is paid around the median for CEOs in the industry. Furthermore, Michael Daly directly owns NZ$412k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	NZ$1.2m	NZ$1.5m	96%
Other	NZ$52k	NZ$29k	4%
Total Compensation	NZ$1.3m	NZ$1.5m	100%

Speaking on an industry level, nearly 54% of total compensation represents salary, while the remainder of 46% is other remuneration. KMD Brands has gone down a largely traditional route, paying Michael Daly a high salary, giving it preference over 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.

KMD Brands Limited's Growth

Over the past three years, KMD Brands Limited has seen its earnings per share (EPS) grow by 44% per year. In the last year, its revenue is up 13%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has KMD Brands Limited Been A Good Investment?

Given the total shareholder loss of 15% over three years, many shareholders in KMD Brands Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Michael receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for KMD Brands that investors should look into moving forward.

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.

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

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.