Why KBS Fashion Group's (NASDAQ:KBSF) CEO Pay Matters

By
Simply Wall St
Published
November 16, 2020

This article will reflect on the compensation paid to Yan Keyan who has served as CEO of KBS Fashion Group Limited (NASDAQ:KBSF) since 2014. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for KBS Fashion Group

How Does Total Compensation For Yan Keyan Compare With Other Companies In The Industry?

At the time of writing, our data shows that KBS Fashion Group Limited has a market capitalization of US$5.6m, and reported total annual CEO compensation of US$390k for the year to December 2019. We note that's a decrease of 47% compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth US$390k.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$513k. From this we gather that Yan Keyan is paid around the median for CEOs in the industry. What's more, Yan Keyan holds US$2.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$390k US$739k 100%
Other - - -
Total CompensationUS$390k US$739k100%

Talking in terms of the industry, salary represented approximately 30% of total compensation out of all the companies we analyzed, while other remuneration made up 70% of the pie. On a company level, KBS Fashion Group prefers to reward its CEO through a salary, opting not to pay Yan Keyan through 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.

NasdaqCM:KBSF CEO Compensation November 16th 2020

A Look at KBS Fashion Group Limited's Growth Numbers

KBS Fashion Group Limited's earnings per share (EPS) grew 50% per year over the last three years. Its revenue is down 38% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 KBS Fashion Group Limited Been A Good Investment?

Since shareholders would have lost about 60% over three years, some KBS Fashion Group Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

KBS Fashion Group pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Yan is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for KBS Fashion Group you should be aware of, and 2 of them are significant.

Switching gears from KBS Fashion Group, 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. 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.
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