Key Insights

KMD Brands' Annual General Meeting to take place on 9th of November CEO Michael Daly's total compensation includes salary of NZ$1.20m The total compensation is similar to the average for the industry 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. 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 9th of November. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See 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. We note that's a decrease of 17% compared to last year. In particular, the salary of NZ$1.20m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the New Zealand Specialty Retail industry with market capitalizations between NZ$338m and NZ$1.4b, we discovered that the median CEO total compensation of that group was NZ$1.6m. So it looks like KMD Brands compensates Michael Daly in line with the median for the industry. Moreover, Michael Daly also holds NZ$412k worth of KMD Brands stock directly under their own name.

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%

Talking in terms of the industry, salary represented approximately 54% of total compensation out of all the companies we analyzed, while other remuneration made up 46% of the pie. KMD Brands pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

 ceo-compensation

KMD Brands Limited's Growth

KMD Brands Limited has seen its earnings per share (EPS) increase by 44% a year over the past three years. Its revenue is up 13% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

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. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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. 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 freelist 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.